Chicago Market Reaction To USDA Report

12/07/16 -- Soycomplex: Soybeans closed with strong gains as the USDA lowered old crop ending stocks to 350 million bu in its monthly report. New crop production was estimated at 3.880 billion bu with the the same 46.7 bu/acre yield figure from June. US ending stocks for 2016/17 are now projected to be 290 million bu, up 30 million from June, but 5 million below the average trade guess. "Prospects for U.S. soybean exports have brightened considerably since January as strong global demand, accompanied by shortfalls in projected South American production, is expected to boost both the quantity and value of U.S. exports," they said. There were no changes to production in South America or imports from China. Jul 16 Soybeans settled at $11.07 1/4, up 24 1/2 cents; Nov 16 Soybeans settled at $10.87, up 32 cents; Jul 16 Soybean Meal settled at $378.30, up $4.60; Jul 16 Soybean Oil settled at 30.71, up 46 points.

Corn: The corn market closed around 4-6 cents higher. Beginning stocks for 2016/17 were lowered 7 million bu whereas the trade was looking for a 100 million bu increase. The new crop US production estimate came out at 14.540 billion bu, 17 million larger than the average trade guess. US 2016/17 ending stocks were only up 73 million bu from the June report whereas the average trade guess was for a 205 million bu increase. Brazil's 2015/16 crop was cut 7.5 MMT (the smallest crop in 5 years) and 2 MMT taken of production in 2016/17 as well. Dr Cordonnier said that domestic corn prices in Brazil are running at around $6/bu and rising due to the sharply lower safrinha corn crop. And the safrinha corn crop is the one that they mostly export. Thus exports this season could fall to 20 MMT versus 30.5 MMT last year, and corn supplies in Brazil could remain tight until the 2017/18 season. Jul 16 Corn settled at $3.49 3/4, up 6 cents; Sep 16 Corn settled at $3.52 1/4, up 4 cents.

Wheat: The wheat market closed higher across the three exchanges in sympathy with corn and beans. The USDA had all wheat production at 2.261 billion bu, 97 million larger than the average trade guess. "Global wheat production is projected at a record high, outpacing consumption for the fourth consecutive year. This trend is leading to the highest exporter ending stocks since 2010/11, which is overburdening the market and pressuring price," they said. "In the United States, stocks are projected at their highest since 1987/88 and account for 41 percent of the exporter total in 2016/17," they added. Russia and Ukraine got a 1 MMT production increase, Argentina, Australia and Canada were all increased by 0.5 MMT. The EU was lowered 1 MMT to 156.5 MMT. The bottom line for the global balance sheet was a production increase of nearly 8 MMT, but a sharp increase in consumption (up more than 13 MMT), lowered ending stocks by more than 4 MMT. Jul 16 CBOT Wheat settled at $4.24, up 7 3/4 cents; Jul 16 KCBT Wheat settled at $4.07 3/4, up 6 3/4 cents; Sep 16 MGEX Wheat settled at $5.02 1/2, up 2 3/4 cents.