On Tuesday, September 12, the USDA released its September Crop Report and shocked the market with its findings. The USDA pegged the corn yield at 169.9 bu / ac with a production total of 14.184 Billion bu. They pegged the bean yield at 49.9 bu / ac with a production of 4.431 Billion bu. Most traders thought the government would lower yields from last month, but this was not the case. Looking at ending stocks, using these numbers put the 16/17 corn ending stocks at 2.35 Billion bu and the 17/18 stocks at 2.335 Billion bushels. Any number over 2 Billion is considered bearish and will usually cause futures and spreads to act quite weak.
On beans, the government pegged the 16/17 ending stocks at 345 Million bushels and the 17/18 stocks at 475 Million bushels. The bean ending stock number for this year is not excessively bearish, and this is what the market could be looking at today. The markets reacted significantly weaker after the report yesterday, but fund buying at the close supported futures significantly off their lows. Today, we witnessed the firmer tone in beans as well. The Chinese are looking to buy more Oct beans out of the gulf and their buying could be significant. This is helping to firm the bean basis locally and is providing support to the futures market. However, the corn market is struggling, and the bushels are stacking up. We do not have a corn export program of any size, and this is allowing corn futures and the basis at the gulf to remain much weaker than normal.
By Marcus Cordonnier, Grain Manager