Good morning!!

The much anticipated August S&D report was out this morning…

To put it simply for you, they drastically cut yield in both corn and beans, actually dropping production levels below the average trade guesses on both commodities which at a glance could/should be viewed as friendly.  The trade was expecting a yield on corn of 126.2bpa, with a production of 10.971bb and a carryout of 660mb (the USDA gave us a 123.4, 10.779 and 650).  The trade was expecting a yield on beans of 37.2bpa, with a production of 2.786bb and a carryout of 130mb (the USDA gave us a 36.1, 2.692 and 115). 

They slashed demand numbers to hold those carryouts above positive.  Cutting demand shouldn’t be much of a surprise but as severe as they projected it this morning -- it indicates that demand rationing has begun already and should continue to happen.  Will it take higher prices for these numbers to come true, or are these price levels “enough”?

Long story short, it appears that the market expected these numbers – the yield came out a little light but when you look at the bottom line (carryouts) this looks pretty much neutral.  “Buy the rumor sell the fact” once again on corn – the rumor was that the crop was horrible (10.97bb) the USDA confirmed that (10.78bb) to be fact and the market is now selling off.  Overall I think the underlying fundamentals are still bullish, but we will now wait till yield reports start coming in the fall for fresh news…

Currently

Corn is down 4 to 6 cents

Soybeans are up 12 to 15 cents

http://www.fccoop.com/markets/information.cfm