A.M. Grain Market Comments 10/11/2012

The Oct 11 USDA Report and the numbers we are all watching are the projected carry-outs for next summer. 

CORN – 619mb

SOYBEANS – 130mb

The average trade guesses for those carryouts was 645mb for corn and a 134mb for soybeans so this report can be considered a touch friendly for both markets.  In general terms what this data confirms is that our markets need to continue to ration demand, especially corn.  619 million bushels is too tight. 

In soybeans the yield was bumped up by 2.5 bpa (now at 37.8bpa) compared to last month (August rains!).  This 226mb of extra production was not surprisingly offset by an increase in demand keeping carryouts snug.  Not wildly bullish but the general theme here is that any extra supply we find will be immediately soaked up by domestic crush and exports.

In corn they reduced our production number slightly, taking yield down 0.8 bpa to 122.0bpa.  In the September stocks report remember – they reduced our carry-in to this year by 193mb.  Both of these reductions in supply were offset today by a decrease in exports which kept the carryout relatively the same.  This carryout of 619mb brings our stocks to use ratio down to 5.6%.  All of this means that carries in the market will remain pretty much non-existent and basis/flat price should remain firm – all in an attempt to keep demand from increasing because we frankly don’t have the supply to spare.

So. General theme?  While this report isn’t overly bullish it confirms what we already knew in regards to corn – supplies are tight.  The story in beans is probably more about how the demand sector has will still be there to buy beans until SA harvests their crop.  From here till the end of the year the weather in SA will be watched closely. 

Currently

Corn is up 25 to 30 cents

Soybeans are up 28 to 33 cents

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