Thursday, August 13, 2015 AgriVisor Afternoon Marketwatch

Thursday, August 13, 2015
***** Corn futures tumble 18 1/2 to 19 1/2 cents; soybeans drop 60 3/4 to 63; Chicago wheat ends lower by 15. *****

   Report day was ugly for the grains as the USDA shocks on yield estimates and acts conservatively on acres. Most in the trade will suggest that we've now seen our highest USDA production estimates, that corn and soybean crops will shrink from here. The worst may not be over, but prices that have returned to last fall's lows leave the board devoid of deserved weather premium. 
   USDA surprises by estimating U.S. corn yield at 168.8 bushels per acres versus trade expectations of 164.5. Diving into the state by state breakdown, notable surprises come from the Western Corn Belt. Iowa's estimate looks conservative enough at 183 bushels per acre versus 178 last year. Nebraska and Minnesota feature large year-over-year leaps, with Nebraska moving from 179 to 187 and Minnesota jumping to 184 from 156. In the Eastern Belt, yield estimates for Illinois and Indiana come down on the year. Illinois at 172, down from 200 in 2014, looks reasonable relative to expectations. Indiana yield drops 30 bushels from 188 to 158.
   Soybean yield also comes in above expectations at 46.9 bushels per acre. Illinois is projected to lose 3 bushels on the year to finish 2015 with 53 an acre. Year-on-year yield increases are estimated to come from states in the West including Arkansas, Kansas, Iowa and Minnesota. 
The corn production estimates increased over the July forecast, from 13.53 billion bushels to 13.686 billion. Feed and residual grew by 25 million bushels, as did ethanol usage, to more than offset a 25 million bushel reduction to exports. Carryout rises from the July forecast to 1.713 billion bushels but comes down slightly from 1.772 billion bushels carried over from the 2014 crop. 
   A higher yield estimate offset a lower acres projection to increase soybean production from the July guess to 3.916 billion bushels. Crush came up 20 million bushels but exports dropped 50. Ending stocks rise on 2014's 240 million bushels to 470 million for 2015. 
   USDA made only slight adjustments to the wheat sheet. Lower soft red wheat yields helped offset improved potential for the spring crop to lower the all-wheat yield from 44.3 to 44.1 bushels per acre. Exports were cut by 25 million bushels and carryout increased from 842 to 850 million bushels, July to August. 
   Global grain numbers are bearish with carryout estimates for corn and wheat rising on the July estimates and coming in much higher than the average trade guesses. A 5 million metric ton reduction to world soybean ending stocks failed to provide any optimism. 

***** Hog futures climb $1.225 to $1.60; live cattle down $1.225 to $2.175 as feeders hold on to fractional gains because of corn price tumble. *****

    Hogs found some minor support from the Supply and Demand report. USDA left their 2015 pork production number unchanged from July, which is still large but at least not growing.
   Liquidation was the name of the game for cattle futures on Wednesday. Traders are not buying that cash and wholesale prices can move higher in straight-up fashion. The report leans neutral to bearish for cattle as imports are increased and exports decreased.