Leffler Finds September WASDE Numbers Not as Bearish as Traders ExpectedFri, 11 Sep 2015 17:50:44 CDT
The latest crop production estimates held few surprises. On Friday, the U.S. Department of Agriculture released the September World Supply and Demand Estimate report. The nation's corn production is forecasted to be the second highest yield and the third largest production on record for the United States. U.S. corn production is forecast at 13.6 billion bushels, down four percent from last year's record production and down less than one percent from the August forecast. Tom Leffler of Leffler Commodities said that was 101 million bushels less than USDA's August estimate, but much higher than what the trade was looking for. Based on conditions as of September 1, yields are expected to average 167.5 bushels per acre. Leffler said that was down 1.3 bushels from the August forecast, but it was a full bushel larger than what the trade was looking for. There was no adjustments to the harvested acres estimate of 81.1 million bushels and there was no adjustments for the imports and exports, but feed usage was lowered by 25 million bushels. Grain stocks were lowered by 121 million bushels over last month. On Friday, the corn futures market closed with double digit gains, which Leffler called overdone.
"When you get down to it, the report ended up being not nearly as bearish as what the trade was looking for," Leffler said. "That doesn't mean it was as friendly as what the trade pushed it to the upside today."
U.S. soybean production is forecast at 3.94 billion bushels, up slightly from August but Leffler said it was 94 million bushels higher than trade expectations. Based on September 1 conditions, yields are expected to average 47.1 bushels per acre, up 0.2 bushel from last month, but a full bushel larger than what the trade expected. The harvested acres were left unchanged at a record 83.5 million acres. Imports and export figures were also left unchanged. The domestic crush was increased by 10 million and ending stocks dropped by 20 million, down to 450 million. That was 26 million more than what the trade was looking for. Leffler said once again, you didn't see much deviation from last month's USDA report, but it wasn't the numbers the trade was looking for. After the numbers came out Friday morning, the November soybean contract made a new contract low. Leffler said it was the positive trend in the corn market that helped soybeans close higher on the day.
USDA estimated U.S. wheat ending stocks at 875 million bushels. Leffler said that was 25 million bushels higher than last month, due to lower wheat exports. The trade was looking for an increase of seven million bushels.
On a global scale, the WASDE report made some adjustments to global corn and wheat production and stocks, but soybeans were left mostly unchanged. The world ending soybeans were lowered by 1.9 million metric tons.
The global corn ending stocks dropped 5.5 million metric ton. Leffler said this was due to the European Union crop production estimate being lowered 4.25 million metric tons, along with a slight drop in the U.S. ending stocks.
World wheat stocks were increased by over five million metric ton. Wheat production was adjusted lower in Argentina, Canada and India, while wheat production was adjusted upward for the European Union, the Former Soviet Union, Russia and Ukraine. That's not good news for the U.S. wheat market with larger than expected ending stocks in the U.S. and world wheat stocks continue to increase. Leffler said we'll probably see world wheat prices go lower and that will help pull U.S. wheat prices to the downside.
Overall, Leffler said the corn and soybean numbers might have been overdone in the market, but we will have to wait and see how traders react when the market reopens Sunday evening. Over the next month, a lot of harvesting will take place. Leffler anticipates much larger changes in next month's report.
Radio Oklahoma Network's Leslie Smith visited with Leffler Friday about the latest crop production numbers. Click on the LISTEN BAR below to listen to the full interview.
Click here to read the full US Crop Production report released Friday, September 11, 2015.
Click here to read the full WASDE report.
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