ANALYSIS- The US grain market rallied at midday Monday, in reaction to USDA's supply and demand report for August, writes 5m contributor Jim Wyckoff.
The government data showed a lower-than-expected US corn crop forecast. Corn futures had a lower start to the trading day but popped to the daily high on the USDA data. Corn prices did back down from initial gains seen in the immediate aftermath of the USDA report.
Traders expected the government to raise the corn crop size slightly, but instead USDA lowered production by 187 million bushels from July's report, to 13.763 billion bushels. The average corn yield was lowered to 154.4 bushels per acre, compared to 156.5 in July's USDA report. USDA also reduced old-crop corn carryover more than expected, to 719 million bushels. The government also reduced global corn carryover for 2013-14 by 800,000 metric tons (MT), to 150.17 million MT.
Corn is also supported early this week on news that Mexico on Monday bought 252,153 MT of U.S. corn for 2013-14 delivery.
Soybean futures prices were sporting good early gains and saw those price gains extended in the wake of a mildly bullish USDA monthly crop report. The USDA trimmed the size of the U.S. crop more than expected, to 3.255 billion bushels. The average soybean yield was pegged by USDA at 42.6 bushels per acre, versus 44.5 in July. USDA left its 2012-13 soybean carryover level at a tight 125 million bushels.
Also supportive to soybeans Monday is news China bought 713,000 MT of U.S. soybeans and an unknown destination purchased 140,000 MT of U.S. soybeans for 2013-14. Combined, this is the fifth largest daily soybean sale on record.
Corn and soybean traders are also keeping an eye on the weather, which calls for dry conditions across the Corn Belt well into next week, although temperatures are expected to remain moderate.
Wheat futures prices are slightly higher at midday Monday, following the USDA report. Wheat continues to be a follower of corn and soybeans. USDA left its all U.S. wheat crop estimate unchanged at 2.114 billion bushels, which is slightly bearish as traders looked for a slight drop in the wheat crop size.
USDA raised its 2013-14 U.S. wheat usage estimates more than expected to leave carryover at 551 million bushels. USDA raised its 2013-14 global wheat carryover forecast slightly from July, to 172.99 million MT.
TheCattleSite News Desk