Soybean futures accelerated early losses today following disappointing numbers from USDA's monthly Supply and Demand report. Still, May futures held above its steep trendline off February lows, keeping selling from accelerating into the noon hour.
The government trimmed just 5 million bushels off its forecast for 2013 soybean crop carryout. While it acknowledged the strong pace of exports, raising sales 20 million bushels to a record 1.53 billion, the government also cut 10 million bushels off crush and raised imports by 5 million. That left projected Aug. 31 supplies at 145 million bushels.
Today's update confirms our suspicions that USDA would be wary of cutting U.S. carryout much. That same caution came through in the agency's assessment of South American production. USDA made no changes to its forecast from Argentina, and cut only 55 million bushels off Brazil, just half what the trade expected. While citing hot, dry weather in southern Brazil, the monthly report made no mention of wet conditions in the key center west part of the country.
USDA did acknowledge stronger prices, however, raising its average cash price for the 2013 crop by 25 cents, to $12.95.
Corn prices weakened in sympathy with soybeans, though USDA's data was a little friendly. The government raised its forecast of exports by 25 million bushels, citing the rising pace of shipments recently and continued strong bookings. The improvement cut ending stocks to 1.456 billion bushels, while the trade expected a small increase.
USDA made no changes to its forecast for South American corn production, despite a series of weather problems in Argentina and potential for lower output in Brazil as well.
The report made no mention of the crisis in Ukraine, or its potential impact on prices. That may be one reason USDA made no changes to its forecast for wheat ending stocks, as we suspected. Carryout was kept at 558 million bushels, though a 15 million bushel increase in spring wheat exports offset a similar decline in soft red winter wheat. Spring wheat sales got a boost from transportation problems that stalled sales from Canada, while recent cancellations hurt SRW sales.
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