Corn and soybean markets are higher at midday, following release of updated production, supply and demand estimates from USDA that avoided major bearish surprises.
For corn, the first forecasts from the government in two months were actually a bit friendly. While USDA raised its forecast of the 2013 crop by 146 million bushels to 13.989 billion, that was actually a little less than the trade was bracing for, with bears warning of 14.36 billion bushels or more. USDA said harvested acres fell by 1.9 million, though it boosted yields to 160.4 bpa.
USDA's forecast for 2013 ending stocks was also less than the trade feared, thanks to the strong demand we've been talking about. The agency bumped up its forecast of usage by 275 million bushels, thanks to a 100-million bushel increase in feeding and a jump in exports of 175 million from previous estimates. That left projected carryout at 1.887 million bushels, up only 32 million and below the 2 billion bushel-plus level many had feared. USDA lowered its average cash price for the crop by 30 cents to $4.50. While cash prices are already substantially below that, the agency counts forward contracts made at higher prices.
USDA increased also increased its estimates of soybean production and carryout, but left the bottom line close to trade expectations, with many believing the government is still too low on demand. USDA raised production by 109 million bushels to 3.258 billion bushels. While acreage fell by 700,000, yields rose 1.8 bpa to 43 bpa. Carryout went up only 20 million bushels to 170, thanks to increases in exports, up 80 million, and crush, up 30 million.
USDA lowered its forecast for average cash prices by 35 cents to $12.15, in line with the current cash market. Soybean futures were posting strong gains, with November surging back above $13.
The only bearish news in the report came in wheat. USDA added 2 million bushels to its higher Sept. 30 production estimate, based on new data from growers who were not done with harvest when the agency's last survey was done. With changes to food and feed usage, overall carryout rose 4 million bushels to 565 million, with no adjustments done to exports. The agency kept its average price forecast for the crop at $7. Wheat futures tried to rally on the back of gains in beans and corn but drifted lower.
On the global scene, USDA raised its forecast for wheat and corn ending stocks, but cut its estimate for soybean carryout.