The U.S. Department of Agriculture has released another shocker.

Ending stock estimates for corn, soybeans and wheat were all reduced in this morning's report .

"Definitely some bullish news for the marketplace," says Mike Jubinville, president and lead analyst with ProFarmer Canada. "In the October report, the focus seemed to be on corn. In this report though, it's soybeans that takes the lead. The trade was expecting some revision higher in U.S. production estimates, but in fact, the USDA lowered them slightly."

Soybean yield was pegged at 43.9 bushels per acre, with production at 3.375 billion bushels. As a result, soybean ending stocks dropped by 80 million bushels.

"The canola market is no doubt going to glean some positive momentum from that," says Jubinville.

The yield figure for corn was lowered to 154.3 bushels per acre, with production at 12.54 billion bushels.

He says the report confirms there will be a battle for acres this winter.

"For the corn market in particular, there is a need and a desire for at least another 3, perhaps 5, million acres dedicated to corn. It's going to have to steal it away from another commodity, whether it's spring wheat or soybeans. But now we're looking at a scenario where the soybean crop and soybean supplies are tighting. The stocks-to-use ratio for soybeans is projected at 5.5 percent, which is extraordinarally tight," he explains. "If you have tight supplies of both corn and soybeans going into next year, there is going to be a battle for acres emerging."

Jubinville says corn prices could hit $6.50 per bushel. "They might be here sooner than we think. The six dollar mark has been the major stopping influence for the corn market. If we can break through it, and certainly with the momentum in the soybean complex that seems plausible, we're throwing darts at a board now but $6.50 doesn't sound out of reach in this environment."

Wheat stocks were reported at 848 million bushels - also lower than what analysts anticipated.

~ Tuesday, November 9, 2010 ~