USDA Report - 2/8/18

11:21 AM

Market moving news: Pre-report estimates kinda missed the mark on corn and soybean carryouts - corn was below the lowest end of range, soybeans were at the very top of the estimated range. World ending stocks were lower than last month, mostly in-line with expectations. First glance at the carryout numbers would seem that the beans have a little bit to fall still, but little change to any numbers outside the decrease in export demand seems like the trade might have already priced this one in.

This morning the estimates from Brazil came out with numbers not nearly as bullish production as were anticipated with corn acres 4% lower than last month's estimates and production off 5%. As it continues to stay wet in the areas where the safrinha crop is planted and further delays soybean harvest, it looks like that second crop might fall under a bit more pressure than estimated. The wetter it remains, the further those acreage and yield numbers will fall as it's imperative that crop is planted early enough to avoid the dry summer (winter) months down there. Soybean production estimates weren't nearly as bullish as estimated, either, with production only up 1% compared with last month's estimates and still down year-over-year. The total production estimates were towards the lower end of expectations (111 - 116 MMT).

World corn production is seen 3 MMT lower than last month's estimates, mostly due to South America's falling numbers, and carryout was decreased by a like amount. World soybean production was estimated 2 MMT lower but stocks were left unchanged.

Domestically, the report seems to have echoed mostly where the trade had been leaning the last few weeks: higher corn (export) demand, falling soybean export demand. And that's about the depth of the changes to the balance sheets as corn exports were increase 125 mbu to 2.050 bbu and carryout was decreased by a like amount down to 2.352 bbu from the January estimate of 2.477 bbu. The weekly export sales totals put out this morning bring yearly outstanding sales (unshipped sales) at 757.8 mbu and if combined with year-to-date shipments of 866.6 mbu, would bring the export sales totals to 1.624 bbu or 80% of the USDA's estimate. Current sales pace is putting corn about 70 mbu ahead of the yearly pace needed to hit the target; could see the USDA's estimates work up in future reports if these recent sales numbers hold for another few weeks.

Soybean export demand had been waning in past weeks, and much of the talk recently has been centered around just how much the USDA was going to cut export numbers. This report saw them trim exports 60 mbu which was passed off to increases to carryout of the same 60 mbu. We did get a good bounce-back in last week's sales numbers which brings the O/S number at 350 mbu. YTD soybean shipments of 1.275 bbu plus the outstanding sales would bring exports to 77% of the USDA's estimates. Unlike corn, soybeans are falling further and further behind pace needed to hit the USDA's export estimate of 2.1 bbu, now currently almost 290 mbu behind pace. If current yield estimates keep falling in SAm, there's a chance we see that pace get closer to needed amounts, but for now we have to be thinking that there's the likelihood we'll see the USDA continue to whittle away at that seemingly over-estimated export demand number, and by default, add more bushels onto the carryout situation.

AG

Disclaimer: This commentary does not represent the views of Tremont Cooperative Grain Company, but rather one author's opinions. Data used in this commentary is taken from sources believed to be accurate, and is intended for informational purposes only and should not be solely used to conduct any type of trading strategy. For more information, please contact Tremont Cooperative Grain Company at 309-925-4981, or email info@tremont.coop.