The United States Department of Agriculture and World’s Agricultural Supply and Demand Estimates recently released three reports that caused the stock market prices for corn to drop the limit of 40 cents overnight, taking the price from $6.55 per bushel to $6.15.

Soybeans went down 27 cents.  At the time this article was written, prices were $6.05 for corn and $11.83 for beans.

The reports were from Crop Production, the World Agricultural Outlook Board’s World Agriculture Supply and Demand Estimates and the Grain Stocks Report.

This drop was not the speculated outcome of the report. Speculation was that the 2011 crop production was down, driving the prices even higher. Instead of getting a bullish report, it was bearish for the farmers wanting to sell for the higher price.

The morning the reports were released, farmers were calling into their local grain elevators to try and get the overnight price before the report, according to a Northwest Iowa ADM merchandiser.  

The report means more to the farmer who has been holding onto grain for the speculated higher price. Since that price is not to come, some may have to sell regardless of price with bank payments due on the Mar. 1. Traders also know this will more than likely keep the prices down until after that date.

Even a week after the reports, prices are still down — corn at $6.04 and beans at $11.83.

Chad Hart, assistant professor in agricultural economics, said that although there was a 40 cent drop, prices are still looking good.

“If you consider how prices used to be, in one day the price could go up or down by 10 percent,” he said. “Even though the numbers weren’t as high, that’s a big jump. Today’s 40 cent drop is big, yes, but it’s less than 10 percent.”

USDA/WASDE Report Summary

Corn grain production is up from the November forecast and is estimated at 12.4 billion bushels.

The 2011 United States average yield is estimated at 147.2 bushels per acre which is up 0.5 bushel from the November forecast but 5.6 bushels below the average yield of 152.8 bushels in 2010.

Area harvested for grain is estimated at 84 million acres, slightly above the November forecast and 3 percent above the 2010 forecast.

2011/2012 corn use is up with higher exports. Projected exports are 50 million bushels higher due to the strong pace of sales to date and reduced prospects for Argentina. Projected ending stocks are 846 million lower at 2 million bushels. The 2011/2012 average corn farm price is lowered 20 cents per bushel on each end of the range to $5.70 to $6.70 per bushel.

Soybean production came to 3.06 billion bushels in 2011, slightly up from the Nov. 1, 2011, forecast but 8 percent down from 2010. For production, the United States is the sixth largest on record. The average yield per acre is estimated at 41.5 bushels, which is above the Nov. 1 forecast by 0.2 bushel but 2.0 bushels below last year’s yield. Harvested area is at 73.6 million acres, which is down 4 percent from 2010.

Projected soybean exports are at 1.275 billion bushels, down 25 million from last month and down 226 million from 2010/2011. Projected ending soybean stocks are at 275 million bushels, up 45 million. Product changes for soybeans include a lower extraction rate for soybean oil, lower soybean oil exports projected and higher soybean oil ending stocks.

The U.S. season-average soybean price range for 2011/2012 is narrowed 25 cents on both ends of the range to $10.95 to $12.45 per bushel. The forecasted soybean oil price is unchanged from the previous month at 50.5 to 54.5 cents per pound. The projected soybean meal price is up $10 on both ends of the range at $290 to $320 per short ton.