The U.S. corn and soybean ending stocks are not tightening as much as expected, according to the USDA Tuesday.
In its February Supply/Demand and WASDE Reports, the USDA printed bigger corn and soybean carryout estimates than trade estimates, resulting in a mild market reaction.
At the close, the March corn futures finished 7¢ lower at $5.56 3/4. May corn futures settled 7 1/4¢ lower at $5.54 1/2. New crop December corn futures closed 2 1/2¢ lower at $4.55 3/4.
March soybean futures finished 14 1/4¢ higher at $14.01 3/4. May soybean futures ended 12 3/4¢ higher at $13.98 3/4. New crop November futures are 11¢ higher at $11.90 3/4.
March wheat futures settled 6 3/4¢ lower at $6.49 1/2.
March soymeal futures finished $2.10 short term higher at $438.70.
March soy oil futures closed 0.89 higher at 46.52¢ per pound.
In the outside markets, the NYMEX crude oil market is $0.46 per barrel higher (+0.79%) at $58.43. The U.S. dollar is lower, and the Dow Jones Industrials are 44 points higher (+0.14%) at 31,430 points.
U.S. Carryout
On Tuesday, the USDA pegged the U.S. 2020/2021 soybean carryout at 120 million bushels vs. the trade’s expectation of 123 million bushels and the USDA’s January estimate of 140 million bushels.
For corn, the USDA sees the 2020/2021 ending stocks at 1.50 billion bushels vs. the trade’s expectation of 1.39 billion bushels and the January estimate of 1.55 billion bushels.
The U.S. wheat ending stocks are pegged at 836 million bushels vs. trade’s expectation of 834 million and the USDA’s January estimate of 836 million.
World Ending Stocks
In its report, the USDA pegged the world’s 2020/21 corn ending stocks at 286.5 million metric tons vs. trade’s expectation of 279.79 million metric tons and the USDA’s January estimate of 283 mmt.
For soybeans, the world ending stocks are pegged at 83.4 mmt. vs. the trade’s expectation of 83.30 mmt. and the USDA’s January estimate of 84.31 mmt.
For wheat, the world ending stocks are pegged at 304.2 mmt. vs. the trade’s expectation of 312 mmt. and the USDA’s January estimate of 313 mmt.
South America’s Crop Production
The USDA pegged the 2020/2021 Brazil soybean output at 133.0 mmt. vs. the trade’s expectation of 133.0 mmt. and the USDA’s January estimate of 132 mmt.
For Brazil’s corn production, it was pegged at 109 mmt. vs. the trade’s expectation of 108 mmt. and the USDA’s January estimate of 102.0 mmt.
For Argentina, the USDA pegged its soybean output at 48.0 mmt. vs. the trade’s expectation of 47.6 mmt. and the USDA’s January estimate of 48.0 mmt.
Argentina’s corn output is pegged at 47.5 mmt. vs. trade’s expectation of 47.0 mmt and the USDA’s January estimate of 47.5 mmt.
Trade Reaction
Peter J. Meyer, S&P Global Platts, head of grain and oilseed analytics, says that the corn market was disappointed with just a 50-million-bushel increase in corn exports.
“Many, including S&P Global Platts, were expecting a 150-million-bushel increase on the heels of the record Chinese purchases at the end of January, but the USDA’s World Board continues to be reactive rather than proactive,” Meyer says.
Meyer added, “The structural imbalance, demand minus production, in China now stands at 28.3 million mt. against our 29 million mt. forecast. We believe that number can stretch to 32 million mt. next year, pushing Chinese corn imports as high as 30 million MT in 2021-22 vs. the current USDA estimate of 24 million MT for the current marketing year. The imbalance is up over 10 million MT year-over-year, something that we believe will continue to grow. No changes to South American corn production was expected.”
Soybeans were much less of a story. The USDA increased U.S. soybean exports by 20 million bushels, as expected. Soybean production in Brazil and Argentina were left unchanged, Meyer says.
Sal Gilbertie, Teucrium Trading, agrees that the markets were disappointed with the USDA corn use numbers, which were largely below expectations in all categories.
“Soybeans remain tight, with the USDA raising U.S. soybean export numbers to the higher end of trade expectations. Soybeans may buy some acres from corn if the estimates in this report hold steady through the March WASDE release,” Gilbertie says.