Grain market analysts are watching the 2012 harvest come in. (Photo by Carrie Muehling/WJBC)

By Carrie Muehling

BLOOMINGTON - Grain markets have had a few days to digest the surprises that came in Friday's USDA Quarterly Grain Stocks report.

The report details inventories on Sept. 1 for corn and soybeans.  The corn number came in much lower than expected, at 988 million bushels.

"In general, that report caught the trade off guard a little bit here on corn.  It was just the opposite on soybeans," said Brian Basting, commodity research analyst with Advance Trading.

The soybean number was 169 million bushels, which was higher than expectations. Basting said each of the past two years the trade has underestimated Sept. 1 corn stocks, which resulted in a limit down move for corn futures the day the report was released.  This year was different.

"Maybe analysts and traders took a more cautious approach this time to the USDA report and apparently went too far the other way," said Basting.

Now the trade will focus on the Oct. crop production, due out from USDA on Oct. 11. A wild card in that report could be the harvested acreage number.

"We are anticipating a drop in harvested acreage given the anecdotal reports of quite a bit of abandonment in places like Southern Illinois and those regions that really were hit even harder by the drought this summer," said Basting.

A lot of soybean harvest will happen this week and next week, so analysts will watch those numbers.  Then the focus will turn back to demand pretty quickly, and eventually to South American production.

Soybean yield numbers have been a pleasant surprise thus far, although expectations were low.  It seems late season rains did help soybeans in a lot of areas.  While that could put more pressure on the soybean market, Basting believes there is still a lot of demand worldwide for soybeans.

Carrie Muehling can be reached at carrie@wjbc.com.