The final tally on the 2107 was released by USDA on Friday and there were no big surprises in the numbers. Now, what is next? For the most part, the Friday numbers were within market expectations with the exception of the winter wheat seeding number, says Doug Werling with Bower Trading, “The trade was expecting the winter wheat seeding number to down about 1 million acres, but they came out with was the same acreage as last year. This was a real poke in the eye and the reason the wheat market reacted the way it did on Friday.”
As for corn and soybeans, the numbers were close to market expectations, says Werling. “In corn, they raised the yield but only increased production about 20 million bushels because they lower the harvested acres,” he said. “So the carry over did not go up that much.” Corn production for 2017 was estimated at 14.604 billion bushels, up 26 million from last month as an increase in yield to a record 176.6 bushels per acre is partially offset by a 0.4-million acre reduction in harvested area. Among the major producing states, yields are estimated to be record high in Illinois, Minnesota, and Ohio.
For soybeans, they lowered the yield but the carryout went up, but not as much as the market had anticipated. Soybean production was estimated at 4,392 million bushels, down 33 million on lower yields. Harvested area is estimated at 89.5 million acres, up fractionally from the previous forecast. Soybean meal production is unchanged as the higher crush is offset by a lower extraction rate.
The USDA did lower its estimate on soybean exports by 65 million bushels. Werling is still optimistic that longer term world demand for grains and oilseeds will be strong, “Long term demand for grains and soybeans is already better than anticipated and will be better this marketing year.” Werling also sees more fund investment coming into the commodity market, now that the USDA report is out of the way, “You should see a nice gain in fund buying in the first quarter of this year.”
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