The USDA made minimal revisions to corn yield and increased soybean yield in its September supply and demand report, an indication that more favorable weather in August benefited the crops.

Corn yield is now pegged at 122.8 bushels per acre, down 0.6 bushel from August, but over 2 bushels more than trade was expecting. Total crop size was also cut a minimal 80 million bushels from August, and stands at 10.72 billion.

Carryout still increased from 650 million bushels in August to 733 million this month, mainly from lower export forecasts and larger old crop carry-in.

Soybean yield and crop size was also reduced, but less than trade expected, as well. The U.S. soybean yield is now projected at 35.3 bushels per acre, down 0.8 bushel from August. Crop size was cut from 2.69 billion bushels to 2.63 billion this month.

Soybean carryout held steady at 115 million bushels, though, which is being considered a level usage needs to be cut, to maintain.

Buyers continue to gravitate away from the United States as a corn source. The greatest competition in the world market right now is from Brazil, where corn is being offered at a $50 per-ton discount to U.S. corn.

Buyers such as South Korea are taking advantage of this price spread, as well as the one between corn and other grains such as barley. Feed barley can currently be booked from India at a $90 per-ton discount, making that an attractive corn substitute in the feed grain market, as well.

Soybean demand remains strong, however. Soy sales for this marketing year already total 660 million bushels, 250 million more than a year ago. Some analysts believe soybean bookings are front-loaded though, and will trail off as the marketing year progresses.

This has been thought for the past several years though, and China has remained a consistent soybean buyer.

The concerns that have been voiced over toxins in this year’s corn crop have been confined to specific regions. The areas that have the highest toxin levels are those that experienced extreme drought. These are mostly in the Southern Corn Belt and far Western Plains.

In the remainder of the Corn Belt, toxin levels are barely above the range seen in any other production year.

We continue to see debate take place over the size of the South American soybean crop, primarily in Brazil. Brazilian officials are estimating the soybean crop size at 82 million metric tons (mmts). This compares to last year’s crop of 65.5 mmts, and the USDA estimate for 78 mmts.

Improved weather conditions and expanded plantings are the two main factors behind Brazil’s increase in production expectations.

Weather conditions in Brazil will be a considerable factor in how large the country’s soybean crop is. At the present time conditions in northern Brazil are drier than normal, and unless they change quickly, planting could be delayed.

In turn, farmers may opt to seed fewer acres than originally thought. Most soybean planting does not take place in Brazil until the end of September, though, and conditions can easily improve by then.

Karl Setzer is a commodity trading advisor/market analyst at Maxyield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.maxyieldcooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources believed to be accurate.

This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.