Has the US Corn Market Hit Bottom?

Hello! I’m just back from a family vacation to Niagara Falls. Stunning, magnificent and soaked to the bone all describe our experience. There aren’t many places that I consider majestic, but The Falls (as my twins called them) is incredibly majestic. I hope you have the chance to experience them.

The big surprise on Monday from USDA was lower-than-expected corn production. The trade was guessing just over 14 billion bushels, and USDA dropped production to 13.763 billion bushels. The average corn yield was lowered to 154.4 bushels per acre, compared to 156.5 in July's USDA report. USDA also reduced old-crop corn carryover more than expected, to 719 million bushels.
Corn was also supported on news that Mexico bought 252,153 MT of US corn for 2013-14 delivery.

Soybean futures prices also turned bullish in the wake of a mildly bullish USDA monthly crop report. The USDA trimmed the size of the US crop more than expected, to 3.255 billion bushels. The average soybean yield was pegged by USDA at 42.6 bushels per acre, versus 44.5 in July.

Also supportive to soybeans was Monday’s news China bought 713,000 MT of US soybeans and an unknown destination purchased 140,000 MT for 2013-14. Combined, this is the fifth largest daily soybean sale on record.

Analysts are questioning if Monday's rally can hold to create at least a near-term bottom for the corn market, while Purdue University experts are predicting "bin-busting corn and soybean yields."

To read more on the report, click here. To hear more from grain analyst Jim Wyckoff on the possible bottom of the corn market, click here. 

Also out on Monday was the World Agricultural Production report.

In India, excessive monsoon rains are raising concerns for 2013/14 soybean yield. India's 2013/14 soybean production is forecast at a record 12.3 million tons, up 0.3 million or 2.5 per cent from last month and up approximately 7 per cent from last year. The yield is forecast at 1.03 tons per hectare, down 5 percent from last month, and down 2.5 percent from last year.

EU wheat is expected to be the third best on record. The 2013/14 EU wheat crop is estimated at 141.4 million tons, up 2.8 million tons. Favorable July weather promoted yield potential and reduced growth delays that were incurred earlier in the season.

In Argentina, dry weather over the last two years in northwestern provinces coupled with a shortage of quality seed is hindering wheat planting and limiting the expected planted area. USDA forecasts Argentine wheat production for 2013/14 at 12 million tons, up 20 percent from last year.

Argentine wheat export taxes and complications with the new pay-back tax break for producers, are limiting grower’s enthusiasm for increasing wheat area.

Ukraine corn harvest forecast as record for 2013/14. USDA forecasts Ukraine corn production for 2013/14 at a record 29.0 million tons, up 3.0 million tons or 12 percent from last month and up 8.1 million tons or 39 percent from last year.

China is expecting a lower rice yield due to drought in southern China which depleted soil moisture, reduced irrigation supplies, and stressed the late rice and single rice crops. China’s rice production for 2013/14 is estimated at 143.0 million tons (milled basis), down 1 million tons or nearly 1 percent from last month but equal to last year’s record output.

China’s cotton regions have experienced varied weather. China’s cotton production for 2013/14 is forecast at 33.0 million bales (7.185 million tons), down 6 percent from last year. Farmers reduced cotton area in eastern China for several reasons: high grain prices, rising production costs, yield volatility, and weak demand. Planted area remained stable in western China.

Have a great week!