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Soybeans Try to Rally; Corn and Wheat Sell Off

Soybeans Try to Rally; Corn and Wheat Sell Off

USDA raises corn crop estimate but cuts soybeans as debate continues

Grain futures traded mixed this morning, with soybeans trying to hold early gains against a tide of selling in corn and wheat caused by September estimates of production, supply and demand from USDA.

As usual, the report produced plenty of surprises. One thing that didn't change, however, was acreage. USDA made no changes there to its corn and wheat acreage estimates, a move that was already anticipated by the trade.

USDA raises corn crop estimate but cuts soybeans as debate continues

Without what's expected to be a downward adjustment later, corn production was pegged 80 million bushels higher at a record 13.843 billion bushels. USDA raised its yield .9 bpa to 155.3 bpa, saying higher yields for the central Plains and South offset declines in Iowa and North Dakota.

The government did toss corn bulls one bone, cutting old crop carryout by 58 million bushels, due to slightly lower imports, and improvements to exports and ethanol usage. Still the bigger 2013 crop more than offset that reduction, boosting carryout a year from now to 1.855 billion, up 18 million bushels from the agency's August estimate. The average cash price for the crop was cut 10 cents to $4.80.

December corn traded to four-week lows in the wake of the report.

Soybeans also broke soon after the report came out at 11 a.m., but quickly returned higher, posting double digit gains before settling back to trade around six cents higher. USDA cut 106 million bushels off its estimate of production, trimming yields 1.4 bpa to 41.2 bpa. The agency said lower exports and crush would keep all those cuts from flowing to the bottom line of its balance sheet, but still reduced its estimate of new crop carryout to 150 million bushels, down 70 million from its August forecast.

USDA also increased its average price for the crop by $1.15 to an average of $12.50, nothing that increased oilseed production elsewhere around the world would more than offset the smaller U.S. crop.

Few changes were expected to the wheat balance sheet – those could come in October, after grain stocks and small grains production is updated Sept. 30. USDA raised its forecast of carryout nonetheless due to higher imports, boosting projected ending stocks by 10 million bushels. The agency left its average cash price for the crop unchanged at $7.

Futures broke at all three exchanges after the report, and were fighting to hold above recent contract lows.

Big Corn Crop Estimate Punishes Prices

Download the Sept. 12, 2013 WASDE here.

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