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Agricultural News

USDA Boosts Grain Stocks; Traders See Bearish Futures

Thu, 11 Sep 2014 16:15:58 CDT

USDA Boosts Grain Stocks; Traders See Bearish Futures

The US government is certain farmers have produced a record corn and soybean crop. On Thursday, the US Department of Agriculture increased production and stocks. In a interview with the Radio Oklahoma Network, Tom Leffler of Leffler Commodities said the report put downward pressure on the market. You can hear his analysis by clicking on the LISTEN BAR below.

"We found nothing in this report except for bearish numbers as it put additional pressure and new contract lows in our wheat, corn and soybean complexes today," Leffler said.   

In the September US Department of Agriculture Supply and Demand report, the agency projected American farmers will harvest 14.395 billion bushels of corn this year. This was higher than trade estimates and 363 million bushels more than the August report. Corn yields are projected to reach 171.7 bushels per acre, an increase over last month estimate of 167.4 bpa last month. USDA also projected domestic corn supplies will total 2.002 billion bushels at the end of the 2014 -2015 season ending August 21, 2015.   Leffler said this is the highest corn stocks level since 2004 - 2005.

In the World Agricultural Supply and Demand Estimates report, USDA increased global corn stocks for 2014 - 2015 to 189.91 million metric tons.   Leffler said world corn stocks are projected to be at the highest level in the last 15 years.

USDA continues to forecast record soybean production this year. USDA boosted US soybean production estimates to 3.913 billion bushels with a average yield of 46.6 bpa.   
Domestic soybean stocks are projected to total 475 million bushels. The agency also increased global soybean stocks to 90.17 million metric tons. Leffler said world ending stock are at record levels.

Leffler said this report did not include any changes to the acreage numbers for corn and soybeans. He anticipates those numbers will be adjusted in the October report, as USDA will be incorporating acreage numbers from the Farm Service Agency.   As harvest gets underway, Leffler anticipates yield reports to come in higher than expected. He anticipates the nations corn and soybean crop to look even larger when the October USDA supply and demand report is released.

US wheat stocks were increased to 698 million bushels, up 35 million bushels from last month's estimate of 663 million bushels. USDA also increased world wheat stocks to a total of 196.38 million metric tons. Leffler said this is fifth highest ending domestic stocks in the last 13 years and the fourth highest global ending wheat stocks in the past 13 years. Leffler said there were no production changes made in this report. He said those figures will be updated in the Small Grains Summary report that will be released September 30th.

Looking ahead for the market, Leffler sees more downside potential in the futures market.

"The biggest concern I have is the downside in the cash market," Leffler said. "...We're worried about the tightness of storage out there for this new crop coming in and increased transportation costs that we will see the basis widen out both on corn and soybeans then we will see much lower cash prices down the road."

Click Here for the full USDA Supply and Demand report.



Analysis from Tom Leffler of Leffler Commodities
right-click to download mp3


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