There's an old axiom that a big crop keeps getting bigger, while a small crop keeps getting smaller. Not this time.
In its Sept. 12 estimates, USDA reduced soybean production and ending stocks significantly from a month ago, justifying the recent runup in soybean prices. But since the market has been trading on expectations of much larger declines, the report had a somewhat negative impact on prices.
November soybeans settled at $5.05 1/2 at closing on Sept. 12, down 1/4. September corn settled at $1.82 1/2, down 2 1/4.
Highlights from USDA's crop production report included a 2.9 billion bushel soybean crop, down from last month's estimate of 2.989 billion, but still up from last years 2.643 billion bushel crop. USDA estimated the corn crop at 10.362 billion bushels, down from last month's estimate of 10.369 billion and up from last year's 9.437 billion bushel crop.
The agency estimated ending stocks for soybeans at 365 million bushels, down 100 million bushels from last month's 465 million bushels and up from last year's 280 million bushel carryover. Corn ending stocks were estimated at 2.2 billion bushels, down from last month's estimate of 2.39 billion and up from last year's 1.794 billion.
USDA also estimated a larger wheat crop of 2.302 billion bushels, up from last month's estimate of 2.263 billion bushels and unchanged from last year's crop. Wheat ending stocks were estimated at 976 million bushels, up from last month's estimate of 962 million bushels and last year's 950 million.
The report was termed, "somewhat negative" by analysts, because a 65-cent runup in soybean prices was based on trade guesses that soybean production would be reduced by as much as 100 million bushels. USDA reduced the figure by 89 million bushels.
On the other hand, the declining production and ending stocks, "could be a foreshadowing of where we're going this winter (in terms of potentially higher prices)," said analyst James Rooney, with Rooney and Co.
The trade was also expecting much lower corn production numbers, based on early reports from harvesting, according to analysts. But USDA left the month to month figures relatively unchanged. "We've had crop conditions in corn go from 75 percent to 62 percent in the good to excellent category down," Rooney said. "We will be looking for further reductions in future reports."
World ending stocks were also down in coarse grains, wheat and soybeans, indicating that demand is still quite strong, according to Don Roose, an analyst for U.S. Commodities, Inc.
The lack of precipitation in August was the major factor behind the lower estimates in production, according to Rooney. "Corn is a crop of July and soybeans are a crop of August. When you look at the percent of normal for precipitation in August, Illinois was at 60 percent, Iowa was at 51 percent and Nebraska was at 52 percent, during key maturity cycles.
USDA is probably conservative in these estimates, according to Rooney. "The question is, `Do you believe the crop conditions, or do you believe USDA?'"
Will McCarty, Mississippi Extension cotton specialist, recently received the Mississippi Agriculture Industry Council "Masters Award". The award is given only periodically and to someone who goes beyond the call of duty to serve the organization.
MAIC noted that McCarty has served the council in "an exemplary manner, having demonstrated unselfishly through his time, efforts, energy, and enthusiasm toward the growth, success and realization of the MAIC goals over the year."
McCarty has served as the executive vice president of the MAIC since 1993. He also chairs the Membership, Educational Seminars and Scholarship Committees.