USDA analysts believe the U.S. will have a lot more corn and soybeans on hand at the end of this marketing year than many traders were expecting.
USDA projects corn ending stocks at 846 million bushels, two million bushels lower than thought last month, but higher than the average trade guess.
Helen Pound from Penson Futures says although the report is negative for soybeans, there are other factors that may limit losses.
For the past five years, the January report from USDA has held surprises for the market and has inspired sharp limit up or down movements.
USDA marginally increased its corn production estimate for 2011, while traders were expecting a slight dip. The government also bumped up its soybean production slightly. USDA pegged 2011 U.S. production at 12.358 billion bushels. U.S. soybean production for 2011 was put at 3.056 billion bushels.
In its first estimate of wheat acreage in the year ahead, USDA says farmers planted 41.947 million acres, up about three percent from a year earlier.
Concerning wheat, Pound says another surprise in the report was the lack of wheat going for feed.