Going in to Friday’s November crop production report trade analysts were looking for a mostly neutral report, and USDA delivered that with its corn estimates. But the actual numbers for soybean production and yield exceeded the guesses so the bean market struggled, according to Chicago analyst Tom Fritz with EFG Group.
“The USDA raised the yield by a bushel and a half which equated to an increase in crop size of roughly 111 million bushels. Now the USDA did try to trim that production increase by raising the crush and raising exports, so your net result was a carryout increase of only 10 million bushels. The bottom line is as we move forward, you know the adage how big crops get bigger? So I think guys are already looking ahead to the January production report where they feel that you could see yet an even higher yield.
Good growing conditions developing in South America is adding to pressure on the soybean market and Fritz says an attitude is developing that the U.S. export market could fall out of bed early next year.
He says what USDA had to say about corn turned into a non-event.
“They raised the yield three tenths of a bushel and really didn’t do much with demand. In fact they raised imports by 25 million bushels, so I thought the corn report all by itself was pretty much a non-event. But the big thing this week has been buying wheat and selling corn and the wheat numbers were a bit of a surprise.”
USDA slashed wheat exports by 50 million bushels and the trade was expecting further easing of world wheat carryout but they actually raised that number.[audio:https://www.hoosieragtoday.com//wp-content/uploads//2012/11/Tom-Fritz-USDA-reaction.mp3|titles=Tom Fritz USDA reaction]