By Darin Newsom
DTN Senior Analyst
The panic selling seen during the U.S. presidential election had lost its momentum in grains Wednesday morning, with soybeans actually climbing up about 6 cents at one point. Corn had crawled back to just above unchanged, while wheat gained 1 to 2 cents. Outside markets were a big help, mostly erasing Tuesday's market plunge as the Dow Jones Industrial Average powered to triple-digit gains and the U.S. dollar index sat a full 2.500 points off its low. But those outside markets weren't facing a USDA report day. Based on its estimates Wednesday, the government agency seemed as though it was grumpy because nobody thought it would do much in November.
To paraphrase a famous saying, "Hell hath no fury like a USDA scorned."
Its numbers weren't just above average pre-report estimates, they were WAY above. The new corn production estimate came in at 15.226 billion bushels due to a higher national average yield projection of 175.3 bb. The former was within 2 million bushels of the high pre-report estimate, the latter equal to the highest guess. It didn't help that, despite a strong early export pace, USDA left its export demand projection unchanged at 2.225 bb (ethanol demand was increased by 25 mb, industrial by 60 mb). The net gain of 85 mb of demand was swamped by the 168 mb increase in supplies, resulting in ending stocks of 2.403 bb as compared to the average pre-report estimate of 2.291 bb and last month's 2.320 bb.
And if corn looked bearish, soybeans were more so. National average yield was increased 1.1 bpa, to 52.5 bpa, putting the new production projection at 4.361 bb. The average pre-report estimate came in at 4.318 bb, with the high up at 4.386 bb. Export demand increased 25 mb to 2.050 bb, fitting given its strong early pace, though crushings were decreased by 20 mb. Add in a couple of minor adjustments and total demand increased by only 7 mb from October, not near enough to keep up with the 92 mb jump in production. The bottom line was ending stocks were pegged at 480 mb, 85 mb above last month.
Global ending stocks for both were also increased with corn climbing 1.4 million metric tons to 218.2 mmt and soybeans adding 4.1 mmt to 81.5 mmt. Both were well above pre-report average estimates, 217.2 mmt and 77.4 mmt respectively, with soybeans coming in above the high guess of 79.4 mmt.
As for wheat, domestic ending stocks came in at 1.143 bb, up 5 mb from October, but below the average pre-report estimate of 1.153 bb. Global ending stocks were pegged at 249.2 mmt, larger than last month's 248.4 mmt and the average guess of 247.7 mmt. In the end it's, well, ending stocks that continue to grow larger that knocked the market lower once again.
All three grain markets wasted no time falling to new session lows with corn down 12 cents, soybeans off 23 cents, and wheat 11 cents lower at the time of writing this story around 11:30 a.m. CST. Selling looked to be strong, likely enough to keep the grain complex on the defensive through the end of the day, and possibly through the end of the week.
Darin Newsom can be reached at darin.newsom@dtn.com
Follow Darin Newsom on Twitter @DarinNewsom
(AG/ES)
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