Chicago Markets Reaction To The USDA Report

10/07/15 -- Soycomplex: Beans closed with small gains. The USDA lowered US old crop soybean ending stocks by 75 million bushels, to 255 million from 330 million, and below the average trade guess of 287 million. They didn't however alter US 2014 soybean production, leaving that at 108 MMT. New crop production was estimated at 3.885 billion, up 35 million from June and higher than the average trade guess of 3.781 billion. Yields were seen unchanged at 46 bu/acre, contrary to trade expectations for a drop closer to 45 bu/acre. Reuters reported that the USDA had only changed its US soybean yield in July twice ever - in 1993 and 2012 - so it was maybe odds on that there wouldn't be any alterations this month. They are due to re-survey plantings in some of the wetter states and possibly adjust acreage numbers, and therefore production, in the August report. They cut 2015/16 ending stocks by 50 million bushels to 425 million, which was still 55 million above the average trade estimate of 370 million. They left Brazil's 2014/15 crop unchanged at 94 MMT, and raised Argentina by 0.5 MMT to 60 MMT. Production for both in 2015/16 was unchanged on a month ago at 97 MMT (a new record) and 57 MMT respectively. Jul 15 Soybeans closed at $10.43 1/2, up 5 3/4 cents; Nov 15 Soybeans closed at $10.22 1/4, up 6 1/2 cents; Jul 15 Soybean Meal closed at $366.00, up $2.00; Jul 15 Soybean Oil closed at 32.31, up 71 points. For the week, Jul 15 beans were down 1 3/4 cents, with Jul 15 meal up $8.60 and Jul 15 oil down 105 points.

Corn: The corn market closed around 6 cents higher. The USDA tightened old crop US stocks to 1.779 billion bushels versus 1.876 billion a month ago. New crop ending stocks were 1.599 billion bushels versus 1.771 billion a month ago and the average trade guess of 1.549 billion. They trimmed 2015 US corn production to 13.530 billion bushels, down 100 million from June. US yields this year were left unchanged at 166.8 bu/acre versus the average trade guess of 165.2 bu/acre. Brazilian 2015/16 corn production was raised 1 MMT to 82 MMT, but the Argentina figure was left unchanged. For 2015/16 they raised their forecast for Brazil's crop by 2 MMT to 77 MMT, but again Argentina was unchanged at 25 MMT. China's crop was increased by 1 MMT to 229 MMT. The EU was seen importing 2 MMT more corn than a month ago, with that increased to 14 MMT, up sharply from only 8.5 MMT in 2014/15. Production potential in Europe this year was adjusted down 2.37 MMT to 65.8 MMT on dryness. New crop world ending stocks were cut more than 5 MMT from a month ago to just under 190 MMT. CONAB estimated the Brazilian 2014/15 corn crop at 80.1 MMT, up 2.2%. FranceAgriMer slashed good to very good corn ratings there by 10 points in a week to 71%. Copa Cogeca estimated this year's EU corn crop at 66 MMT, down from 68.9 MMT previously and 7.8% below last year. The European Commission was a bit more bullish on corn's prospects coming out with a figure of 68.4 MMT. Jul 15 Corn closed at $4.27 1/4, up 6 cents; Dec 15 Corn closed at $4.45, up 6 cents. For the week that puts both Jul 15 and Dec 15 corn 6 cents higher.

Wheat: The wheat market closed mostly lower, save for the soon to expire front month Jul 15 in Chicago. The USDA put 2015/16 US ending stocks at 842 million bushels, up from last month but below the average trade guess of 860 billion. Russia's crop this year was raised 2 MMT to 57 MMT and Ukraine's was upped 1 MMT to 24 MMT. Europe's was cut 2.8 MMT to 147.8 MMT, and Canada's was seen down 1.5 MMT to 27.5 MMT. The global 2015/16 wheat crop was nudged a little higher to almost 722 MMT, but consumption was decreased from almost 720 MMT to a little over 714 MMT. World 2015/16 carryout was raised sharply, up from 202.4 MMT to 219.8 MMT. No shortage of wheat on the international market there then, even if there's a little less in Canada and Europe. The latter prompted the USDA to raise their forecast for US wheat exports in 2015/16 from 25.5 MMT to 26.25 MMT, despite the strong US dollar. That's also 15% more than in 2014/15. In other news, the European Commission estimated the EU soft wheat crop at 139.9 MMT. Copa Cogeca forecast it at 137.1 MMT, with an all wheat crop of 144.4 MMT, some 3.4 MMT below today's USDA offering. FranceAgriMer trimmed wheat crop condition ratings by 2 points on a week ago to 75% good to very good. They said that the 2015 French wheat harvest is 15% complete. Tunisia bought 117,000 MT of milling wheat and 75,000 MT of feed barley for Aug/Oct shipment, both of optional origin. Jul 15 CBOT Wheat closed at $5.81 1/2, up 9 1/4 cents; Jul 15 KCBT Wheat closed at $5.57 1/2, down 7 1/2 cents; Jul 15 MGEX Wheat closed at $5.97 1/4, down 8 1/2 cents. For the week, Chicago wheat was down 4 1/4 cents, with Kansas 18 1/2 cents lower and Minneapolis falling 9 cents.