For corn, said Basting, the question now becomes: Do we see any further increase in corn exports from the 2.1 billion bushel level? The report “also reduced feeding by 100 million. I want to underscore that because the feed component is still the largest use of corn. So, there’s a lot of volatility yet for corn.”

Both analysts expressed a bit of a surprise on the USDA’s upside estimate in soybean yields.

“A 350 million bushel carryout is still plenty,” said Basting. “I think now the market will wait to see the harvest results for soybeans and turn attention to South America.”

One key point on beans: The import estimate for China in 2010/2011 was raised another three million tons to 55 million tons. “That’s over 2 billion bushels of beans, a tremendous amount forecast to be imported by China.”

The Chinese demand appears to have “saved” the soybean numbers from being “quite negative,” said Roggensack. “Fifty-five million tons in imports is a tremendous revision higher — we were at 49.5 million tons last year. We were at 41 million tons imported by China just two years ago.”

Even with the big increase in demand from China, “world ending stocks for soybeans are still pegged at a record high level,” continued Roggensack. “But the USDA is assuming that Argentina and Brazil will produce 8.5 million tons less soybeans in the coming year. We’ve already seen reports out of Brazil (indicating) their planted acreage will go up.”

Roggensack doesn’t expect Argentina’s soybean acreage to go down. “So, the USDA is counting on a pretty big revision down in yields in the coming year for Brazil and Argentina. While (those nations) have some (drought) issues, you’re still counting on lower yields even though the crop isn’t even planted yet.”

With the USDA report, the wheat market received confirmation “that, despite the fact of losses overseas, world stocks actually increased by three million tons,” said Basting. “United States ending stocks are still over 900 million bushels. We’re not running out of wheat, at the moment. The market will now closely follow what the crop size is in western Australia and Argentina. But I think the wheat market isn’t nearly as tight as it was three years ago.”

Roggensack agreed that “we don’t have a wheat supply issue in the world or United States. The revision higher in world ending stocks was certainly a surprise considering what’s happened in the Black Sea region.”