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USDA Final Soybean Report Disappoints Market Bulls

By Rob Hatchett
The U.S. Department of Agriculture (USDA) released its annual U.S. Crop Production 2019 Summary report on Friday, January 10 in addition to its monthly World Agricultural Supply and Demand Estimates (WASDE). Historically, the January crop production report provides the market with the agency’s final estimate of the 2019 U.S. soybean crop until output is revised again next fall after the agency revises its residual usage calculations once all known supply and usage factors have been accounted for and September 1 soybean stocks have all been counted.
According to the averages of published analyst estimates published by Reuters News, the trade was looking for the report to reduce its estimate of the 2019 U.S. soybean crop by about 1 million tonnes to 95.580 million. Lower output was seen to have been a result of both reduced yields and lower harvested area estimates as this year’s long, drawn-out harvest due to adverse conditions was seen leaving fewer soybeans in the fields for farmers to collect.
This set the stage for a somewhat disappointing reaction from the trade following the release, however, as the agency increased its estimate of the 2019 U.S. soybean crop by 0.22 million tonnes from November to 96.84 million resulting in a somewhat bearish surprise of more than 1 million tonnes. The increase came as an upward revision to yields, driven primarily by increases in the eastern Corn Belt states of Illinois and Indiana, were partially offset by decreased area estimates for the western Corn Belt states of North Dakota and South Dakota.
Of the 29 key states studied by USDA for soybean output, 12 showed higher yields when compared with the previous November estimates, 5 states saw unchanged yields, and the remaining 12 states saw yields reduced from November. States with increased yields tended to be ones with a smaller acreage base. Looking at the acreage estimates, planted acres were lowered in 10 states, increased in 3 and were unchanged in the remaining 16. USDA’s harvested area estimates were revised lower for 18 states, were unchanged in 7 states and saw minor increases in the remaining 4 states. 
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