The August USDA report was a bullish one. There’s no other way to explain it, given yields for both corn and beans were below what most anticipated at 174.6 for corn and 50 for beans.

But what about today’s September report? We saw increased yields for both and carry-out levels were raised as well. One would assume the markets would get smoked, right? No, they didn’t and we’ll look at the specifics and why we reacted the way we did.  

Look at the numbers

First of all, let’s look at the numbers. Corn yield was pegged at 176.3 bushels per acre, while harvested acres increased by 600,000 acres. Interestingly, planted acres went up the same amount as harvested acres. Regardless, total production went up 246 million-bushels to 14.996 billion bushels. So, to get to the carry-out going up only 166 million bu., we had to also see demand increased by 150 mb with feed and residual usage as well as exports each accounting for half of this total.

All in all, the numbers released for the U.S. Supply and Demand in September was certainly bearish versus the August numbers.

For soybeans, there wasn’t as much in the way of changes. 50.6 bushels per acre was an increase of .6 bpa, while harvested acres were lowered by 300,000 acres. Total production ended up just 35 million bushels at 4.374 bbu.

Given carry was raised by 30 mb from 155 to 185, we see this is due to production with some minor revisions. As with corn, we injected some demand back into the equation with the net result just 10 mb. With crush being lowered by 25 mb but exports being raised 35, that’s where we got the additional demand.

Now, if you’re paying attention, there’s 5 mb we need to ‘true up’. Given imports were lowered 10 mb but ‘carry-in’ from the year we just exited was raised by 15 mb, that’s where the last 5 mb was hiding.

So-how did we get a bullish reaction from a bearish report?

First let’s look at how we traded on Friday. While Dec corn was up 14 cents at one time, it still closed at $5.17 ½, up 7 ½ cents or 20 cents off the highs. November beans traded up to $13, up 29 ½ at one time. We settled at $12.86 ½, up 16 cents and 23 ¾ off the highs.      

Now let’s answer the question. These markets have been beat up of late. Given how we’ve traded in the last few weeks let alone since the August report, it’s not hard to fathom we’d be ‘expecting’ a bearish report.

My bias going into a report where everyone is leaning to one side is to consider what it may take to keep heading in that direction. When we’ve already been leaning bearish, it generally takes a bearish report to keep us heading lower and this September report was certainly a good example of how that can work.

One more thing

The last thing I want to point out about this interesting September report is what the USDA has to say about our average cash prices for corn and beans for this new marketing year we are now in. For corn, the USDA lowered the average cash price from $5.75 to $5.45. As I just mentioned, we’re currently looking at December corn prices about 30 cents below the cash price the USDA expects to see this marketing year.

It appears USDA expects prices to get better from this point forward -- an interesting observation from my vantage point.

For beans, we saw the average cash price lowered from $13.70 to $12.90-80 cents! Given our November bean price is pretty-close to this level, we don’t see near the difference we see in corn. While I’d say USDA appears to look for better days ahead for corn prices, I’m not so sure they see the bean situation nearly as friendly.

Again, this September report was expected to be bearish and it was. Fortunately, the reaction we received was more of a bullish nature, for a variety of reasons. I like the tone this sets heading into harvest and hope producers will make the most of these good prices we’re enjoying in 2021.

Feel free to reach out to me or anyone on the AgMarket team. We’d love to hear from you.

Reach Matt Bennett at 815-665-0462 or [email protected]

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