USDA Reports Big Bearish Crops
USDA gave corn and soybean traders a big bearish surprise last Friday morning by substantially raising its production estimates for both crops.
USDA pegged the corn crop at 9.407 billion bushels as of Oct. 1, up 192 million bushels or nearly 2.1% from a month earlier. The USDA estimate was 103 million bushels above the range of analysts' expectations.
USDA raised soybean production to a record 2.907 billion bushels, a 2.6% increase from its previous estimate of 2.834 billion. The USDA soybean estimate was 30 million bushels above the range of trade estimates.
The larger corn crop more than offset the impact of stronger corn usage estimates. As a result of the larger production estimates, USDA boosted the projected 2001-2002 corn carryout to 1.458 billion bushels from 1.361 billion.
USDA raised its 2001-2002 soybean ending stocks estimate to 345 million bushels from a previous estimate of 255 million.
The rise in expected production clearly weakens the price outlook for both corn and soybeans. December corn futures seem almost certain to test their contract lows at $2.02 1/4 this fall and could move lower. November soybean futures could retest their contract lows at $4.17 1/2 before harvest is over.
Editors note: Richard Brock, Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.
To see more market perspectives, visit Brock's Web site at www.brockreport.com