USDA Report - My Reaction And Early Call

09/11/11 -- I'd say neutral for corn and a bit bearish for soybeans and wheat. Aside from the US production numbers falling a bit more than expected for corn there wasn't too much bullish news here. US ending stocks were higher than expected for corn, wheat and beans: by 48m, 13m and 11m bushels respectively.

Around the globe we saw Argy wheat production reduced by 0.5 MMT, which was more than made up for by increases for the EU-27 of 1.15 MMT and Kazakhstan by 2 MMT taking ending stocks to 202.6 MMT - the highest in a decade.

Russia and EU-27 wheat exports were seen rising by 1 MMT each, although Kazakhstan's were left on hold - presumably due to logistics.

For corn, Chinese production was raised 2.5 MMT to 184.5 MMT, that of the EU-27 by almost 2 MMT and Argy output increased by 1.5 MMT to 29 MMT. Exports from the latter two were both increased by 0.5 MMT.

EU-27 barley output was also raised by almost 0.5 MMT to 52.4 MMT, with exports increasing by a similar amount to 2.5 MMT.

For soybeans the USDA pegged world production marginally higher with reduced output in the US and Argentina being offset by a 1.5 MMT increase for Brazil to 75 MMT. China's import requirement was left unchanged at 56.5 MMT. World ending stocks were increased by 0.5 MMT.

Overall it's looking like a bit of a non-event, and I'd expect the market this afternoon to quickly refocus on European debt problems, particularly now that Italy is starting to take centre stage from Greece. The firmer US dollar should see grains trading red this afternoon with early calls: beans and wheat 7-10 cents lower and corn down 1-3 cents.