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Corn ending stocks takes analysts by surprise

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The U.S. Department of Agriculture (USDA) today released its August World Agricultural Supply and Demand Estimates (WASDE). The monthly report took analysts by surprise, and threw grain markets for a loop.

U.S. Department of Agriculture officials resurveyed planted acreage, following an uproar related to the numbers released earlier this summer. The revised numbers, released with the August World Agricultural Supply and Demand Estimates report, played a role in the shocking corn ending stocks. Brian Grossman, market strategist with Zaner Ag Hedge, explains.

“The biggest shock comes down to the ending stock numbers,” Grossman said. “USDA came to a 2.18 billion bushel ending stock. The average trade was looking for 1.6 billion. Big numbers on that. Yield went higher on a slightly revised, lower acreage number. We’re now looking at an 83 million harvestable (acreage) with 169 for a national average yield, keeping those supplies pretty big.”

Estimates remained steady, when it came to soybeans.

“They did not change soybean yield, and made a small adjustment on acreage. Ending stocks were close to last month’s – Old crop at 1.07 billion and new crop at 755 million,” Grossman said. 

Not surprisingly, grain markets had an “ugly” reaction to Monday’s report. 

“Corn is limit down in September, December, March May and almost July. Soybeans are taking it rough, down about 12 ½ cents. Meal is down heavy. Wheat is heavy,” Grossman said.

Grossman reminds producers, “We are a long way from final yield.” 

“What the USDA says this early, as we all know, has a chance of changing, especially in a year like this,” Grossman said. “Calendar spreads have been selling off for awhile. I’ve been bearish because of the seasonal, and I figured we were going to remain bearish after this report. USDA is throwing in that extra hand to keep the bears on.”

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