View the Dec. 10, 2014 USDA Crop Report
In a surprise move, USDA on Monday in its monthly crop report lowered its estimate for the 2014 U.S. corn crop to 14.41 billion bushels from its October’s 14.475 billion forecast saying the harvest has been hampered by a number of factors including heavy rain and delays in crop development.
To achieve that lower number it trimmed the expected average yield to 173.4 bushels per acre from October’s 174.2, while leaving harvested acreage unchanged at 83.1 million. The 14.41 billion would still be a record large harvest.
USDA, as expected, raised soybean production slightly to a record 3.958 billion bushels from October’s 3.93 billion. The yield was raised to 47.5 bpa from October’s 47.1, while harvested acreage was unchanged at 83.4 million.
USDA trimmed U.S. corn ending stocks slightly to nearly 2.01 billion bushels from October’s 2.08 billion, but left soybeans unchanged at 450 million. Wheat stocks were lowered to 644 million from October’s 654 million and down from the average trade forecast of 660 million.
Chicago corn futures rose and fell after the report but recovered to hold about 4 cents higher near midday. Soybean futures briefly traded higher but then fell with November down about 11 cents at midday and volume-leader January off 8 cents.
“USDA’s decision to tighten up its balance sheet for corn is good news, but it’s hard to get really bullish with carryout still above 2 billion bushels,” said Bryce Knorr, Farm Futures senior grain analyst. “There’s still no demand driver to get rid of that surplus quickly, but it should shrink slowly over the next year.”
Few changes were noted in overseas producers. USDA trimmed China’s corn crop to 8.43 billion bushels from 8.54 billion and shaved Australia’s wheat to 882 milllion bushels from October’s 918 million.
Wheat crops in Russia and Ukraine, which compete with U.S. supplies for the Middle East, were unchanged at 2.17 billion bushels and 900.1 million, respectively. However, attache reports from that region claim next year’s Russian wheat harvest may be lower because of dry planting conditions this fall.
“China’s (corn) crop was cut around 120 million bushels and reductions could wind up twice that. But with big reserves the government there doesn’t want to import corn,” said Knorr.
“Longer term farmers are planning fewer (corn) acres in 2015, which is probably the best support for the market right now,” advised Knorr. “Keep making sales with an eye on your bottom line. Funds are bullish now, but it’s hard to keep them interested for nine months or more.”
Knorr also notes that soybeans should find some short-term support from the squeeze on soybean meal and prospects for an extended selling season this winter due to planting delays in South America.
“But unless production falls sharply in Brazil and Argentina, it’s hard to be bullish, especially with U.S. growers wanting to plant more soybeans in 2015,” he said.
USDA did not change it soybean production numbers for Argentina or Brazil.
The small cut to the U.S. wheat carryout to 644 million bushels may be temporary because of slow exports.
“Rallies likely must wait until the winter wheat crop emerges in the northern hemisphere,” he said.