September USDA crop report shows ‘big crops get bigger’

The U.S. Agriculture Department on Thursday raised its forecasts for U.S. corn and soybean production with the corn harvest now seen at a gigantic 14.4 billion bushels and soybeans at a record 3.91 billion.

Larger crops had been expected, but corn and soybean numbers in the September USDA crop production report topped Farm Futures estimates and many estimates in a Reuters survey. In August, USDA had forecast 14.03 billion bushels for U.S. corn and 3.82 billion for soybeans.

Wheat also received some bearish price news as USDA forecast larger-than-expected year-end domestic and global supplies. USDA left U.S. wheat production unchanged at 2.03 billion bushels.

USDA’s latest crop report shows expectations of more corn and soy

Chicago corn, soybean and wheat futures closed lower after the report, with contract lows set in those markets.

Todays reports were bearish as expected, with soybeans perhaps more vulnerable than corn right now, said Bryce Knorr, senior grain analyst at Farm Futures. Brazils crop could be even bigger than USDA forecast, which would put even more pressure on prices long term. Storing soybeans long-term could be risky, but a dry start to the growing season in Mato Grasso could provide a little short covering rally after harvest.

USDA raised global soybean production to 311.13 million metric tons as it lifted forecasts for United States, Argentina and Brazil. Argentinas crop was raised to 55 million tons and Brazil to 94 million from 54 million and 91 million.

Global corn production was raised to 987.52 million metric tons from Augusts 985.39 million. Larger crops were forecast for the U.S, Brazil, and Europe. Brazils crop was put at 75 million from Augusts 74 million, while Europes went to 68.35 million from Augusts 67.05 million.

Chinas corn crop was trimmed by 5 million metric tons to 217 million because dry weather in the North Central Plain. Hot, dry conditions in the Ukraine had USDA reducing that crop to 26 million metric tons from 27 million.

Corn growers may have to wait longer for basis to improve from weak harvest levels. Corn from South America is still eating into our export market share, and grain will start flowing soon from Ukraine. Plus shippers will push soybeans through the pipeline first, leaving corn to wait in line again into 2015, said Knorr.

Year-end stocks increase

Current year U.S. corn ending stocks were raised to 2.0 billion bushels from Augusts 1.81 billion and soybean stocks went to 475 million from Augusts 430 million. The corn stocks were a little less than the average trade estimate while the soybean number topped the trade average.

Domestic year-end wheat stocks were raised to 698 million bushels from Augusts 663 million, largely on ideas there will be an increase in imports of spring wheat from Canada.

Global wheat ending stocks were raised to a larger-than-expected 196.38 million metric tons from nearly 193 million in August..

Wheat also faces a very competitive export market, with record production capping sales, said Knorr. The one thing USDA hasnt factored in yet is smaller spring wheat production, which seems likely given the sharp drop in crop ratings over the past month.

Australias wheat production was lowered to 25.5 million metric tons from 26 million due to dryness in its northeast growing areas, while Argentinas wheat was cut to 12.3 million metric tons from 12.5 million. Russias wheat crop was unchanged at 59 million, while Ukraines was raised to 24 million from 22 million.

Download the complete Sept. 11, 2014, USDA WASDE report online.