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Corn+Soybean Digest

USDA Corn, Soy Data Neutral to Bearish

Friday morning’s monthly USDA supply/demand update appeared to hold neutral to somewhat bearish news for the corn and soybean markets.

As expected, USDA significantly raised both its 2008-2009 and 2009-2010 corn carryout projections. The agency left its 2008-2009 soybean carryout estimate unchanged and raised 2009-2010 soybean ending stocks moderately.

USDA pegged 2008-2009 corn ending stocks at 1.770 billion bushels, up 170 million bushels from its June estimate and toward the high end of trade estimates that averaged 1.692 billion bushels in a range from 1.6 billion to 1.850 billion.

The larger carryout projection reflects the larger-than-expected June 1 stocks figure reported by USDA on June 30, which implied lower-than-expected usage.

USDA cut projected old-crop feed/residual usage by 100 million bushels and also cut projected corn-for-ethanol use by 100 million bushels, and other seed/industrial use by 20 million bushels, while raising expected old-crop exports by 50 million bushels.

As a result of the larger stocks, USDA lowered its projected range for the 2008-2009 average on-farm price of corn by 15¢ on both ends to $3.95-4.15.

USDA pegged the 2009-2010 corn carryout at 1.550 billion bushels, up 42% from its June estimate of 1.090 billion, but closely in line with trade estimates that averaged 1.567 billion bushels in a range from 1.29 billion to 1.828 billion bushels.

As expected, USDA raised its 2009 corn crop estimate significantly reflecting the larger-than-expected plantings revealed in the June 30 crop acreage report.

USDA pegged 2009 U.S. corn production at 12.290 billion bushels, up 355 million bushels from its June projection.

The new-crop balance sheet contains mildly positive news on the usage side as USDA raised projected 2009-2010 exports by 50 million bushels and also raised projected feed/residual usage by 50 million bushels, reflecting expectations for lower prices to boost demand from those sectors.

However, USDA left 2009-2010 corn-for-ethanol use unchanged at 4.1 billion bushels and cut its projection of other seed/residual use by 35 million bushels.

USDA lowered its projected range for the 2009-2010 on-farm average price of corn sharply to $3.35-4.15 from the previous $3.90-4.70.

USDA’s unchanged old-crop soybean carryout estimate of 110 million bushels was no surprise to the market. Trade estimates of the old-crop soybean carryout averaged 107 million bushels in a range from 86 million to 130 million bushels.

USDA did raise projected old-crop exports by another 10 million bushels to 1.26 billion bushels and boosted the old-crop crush another 5 million bushels, but cut projected residual usage and raised expected soybean imports to offset those changes.

USDA pegged the 2009-2010 soybean carryout at 250 million bushels, up 40 million bushels from its June estimate and toward the high end of trade estimates that averaged 229 million bushels, in a range from 115 million to 384 million bushels.

USDA raised projected soybean production by 65 million bushels to 3.26 billion to reflect the larger soybean plantings reported in the June 30 crop acreage report.

However, USDA also raised projected 2009-2010 soybean usage by 24 million bushels to reflect continued strong demand from China and favorable domestic crush margins.

USDA raised projected 2009-2010 soybean exports by 15 million bushels to 1.275 billion bushels and raised the projected crush by 5 million bushels.

USDA slashed its projected range for the 2009-2010 average on-farm price of soybeans by 70¢ on both ends to $8.30-10.30 to reflect the larger expected ending stocks.

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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