October Reports not so Bearish After All

Bullish corn stocks and production numbers from USDA Thursday morning and positive demand and ending soybean stocks sent the markets up. There was mixed news in the crop production and world supply and demand reports, but what stood out to Mike Silver of Kokomo Grain was that it simply was not as negative a report as trade analysts expected.

“The trade was expecting a bearish report and although there are some bearish numbers in this report, when you dig deep down into the numbers there are definitely some very friendly factors, and this initial reaction was definitely sharply higher.”

Projected average yield for U.S. soybeans this season was increased by 2.5 bushels per acre, and the planted and harvested acres totals went up 1.1 million. Those adjustments weren’t a surprise, but the soybean bullishness came from good demand news.

“The export number was increased 210 million bushels to 1.265 billion bushels, a very, very robust export projection. The ending stocks number 15 million bushels higher than the September number at 130 million bushel, but historically that’s still a very tight bean number, and with the insatiable appetite, if you will, of the Chinese in particular for U.S. soybeans, that’s friendly to the soybean market.”

Silver says digging deeper into the report than the corn balance sheet revealed more bullish futures market data.

“Coarse grains, corn, sorghum, barley, oats and rye in the U.S. all had lower ending stocks than the previous month. World ending stocks as well as world coarse grain stocks are lower than the previous month as well as world wheat stocks being lower. So all the feed and energy grains lower in the report than a month ago and that also is providing some upward price catalyst.”

Put all of the USDA data together and Silver concludes there is still plenty of potential for futures prices to go higher.[audio:https://www.hoosieragtoday.com//wp-content/uploads//2012/10/Mike-Silver-Ocotber-report-reaction.mp3|titles=Mike Silver Ocotber report reaction]The full crop production and WASDE reports are available at this website.