Report features rare bull surprises
Joe Camp of AgriVisor - InsideFutures.com - Thu Oct 11, 2:44PM CDT

***** Corn futures gain 5 1/2 to 6 1/2 cents; soybeans up 6 to 6 1/2; Chicago wheat down 2 to 2 1/2. *****

#USDA offered up a pair of Crop Production and WASDE reports that leaned mostly friendly the market. Corn yield surprised with a lowered estimate while soybean yield increased, but by less than expected. The big surprise for soybeans involved a big cut to acreage. Wheat estimates came in mostly as anticipated.
#Corn yield dropped from 181.3 to 180.7 bushels per acre. Illinois contributed to the national average reduction, moving from 214 to 212 bpa. Iowa corn yield also came down 2 bushels to 204 bpa. Kansas, Nebraska, and South Dakota were among the other states with yield cuts while Ohio, Indiana, and Missouri were included in the group of 11 states with corn yield increases.
#Soybean yield was adjusted up from 52.8 to 53.1 bushels per acre with notable help from a 2 bushel gain for Ohios crop. Illinois yield held steady at 66 bpa while Iowa earned an extra bushel to make 61 bpa.
#A friendly surprise was produced by changes made to the soybean acreage estimates. Planted area was cut by 500,000 acres to reflect the latest filings from the FSA. Harvested acreage fell by 600,000 acres, possibly due in part to crop lost to flooding in the South/Southeast. Corn acreage did not change.
#The USDA added 2.32 million tons to the global corn ending stocks projection, mostly as a result of a lower U.S. new-crop corn yield being more than offset by higher U.S. beginning stocks.
#As expected, changes made to world soybean ending stocks were, like corn, primarily a reflection of U.S. balance sheet adjustments. World corn carryout was projected at 110.04 million and was close to matching the average trade guess.
#Unrevised were USDAs estimates for corn and soybean production in Brazil and Argentina. USDA sees record output potential for South America in the season ahead and the government analysts are starting out near the top end of most estimates coming from within those countries. The idea is that it is just simply too early in the season to do much in the way of fine-tuning.
#Wheat futures made a bearish reversal lower after initially finding strength from a lower world ending stocks estimate. But, USDA left Russia in charge of the wheat market by leaving the countrys export estimate unchanged at 35 million tons. Despite crops size reductions for Russia and Australia, USDA did not revise higher the projection for U.S. exports.
#Grain gains may have been capped by the sell-off that was tugging on outside markets like oil and equities. Stock traders see short-term interest rates rising to meet long-term yields, which they view as a foreboding signal linked to the onset of economic recession. A silver lining for the commodity space is that the dollar index has been moving lower along with the stock and bond slide.
#Showers are in the mix for tonight and tomorrows Midwest forecast and could pop up again on Sunday, but the heaviest rain potentials are confined to the Southeastern stretches of the region. Most of the two-week outlook is dry for the water-logged Western Corn Belt, but it will take several days before wheels are turning again after rainfall and even snow accumulation over the past several days.

***** Live cattle futures steady to $0.55 higher; feeders bull spread $0.57 higher to $0.75 lower; hogs down $1.52 to $2.10. *****

#The WASDE report had only little to say for livestock. Beef and pork production estimates were brought down slightly for 2018, but consumption was also revised lower to keep ending stocks unchanged. Some of the beef production was brought forward into 2019. Overall, the report supported a bull spread trade that has been featured prominently as of late.