After weeks of silence, USDA is catching up on their crop report releases. On Feb. 8, USDA released several reports: World Agricultural Supply and Demand Estimates (WASDE), Grain Stocks and Crop Production.
The information hit the markets with a thud, leaving corn prices slightly lower for the week and soybeans mixed.
“There was a lot of pent up anxiety on these delayed reports,” says Jeff Beal, market analyst with the Gulke Group. “The expectation was for some potential fireworks today from the USDA and instead what we got was a dud of a firecracker.”
USDA didn’t make major changes to the carryout stocks for corn, soybeans or wheat. However, USDA did lower corn yields to a national average of 176.4 bu. per acre.
“We did get lower yields from the USDA,” says Beal, filling in for Jerry Gulke. “But a lot of that was offset. Feed and residual was down another 125 million bushels. We saw exports stayed flat. But the bottom line was a 50-million-bushel tightening of our carry out stocks.”
This brings the corn carry out to around 1.7 billion bushels. “That’s not that the 2-billion-bushel carryout that would have been even more burdensome, but it's still an issue going into this next year,” Beal says. “We didn't get back down below that 1.5-billion-bushel area that would have brought some excitement to the market.”
The soybean numbers were a similar situation, Beal says, with yields being reduced to 51.6 bu. per acre.
“Like in corn, there wasn’t a dramatic reduction in ending stocks,” he says. “This to me indicates that maybe the USDA is losing confidence in the potential for China to come back in and buy and enormous amount of beans.”
Looking forward, Beal says, the next big issue on the horizon will be USDA’s Prospective Plantings report, which will be released on March 29.
The volatility and uncertainty in the grain markets points to the need for producers to spend time this winter studying their financial situation and cost of production.
“We have to focus on doing a better job marketing, even in this environment of low prices, there are still opportunities out there to take advantage of the carry, take advantage of those basis opportunities when they do arise and do the absolute best job that we can from a marketing standpoint,” Beal says.
Read more news and analysis of the Feb. 8, 2019 USDA reports: