US final corn and soybean stocks are not decreasing as much as expected, according to the USDA on Tuesday.
In its February supply / demand and WASDE reports, the USDA published higher estimates of corn and soybeans than trade estimates, resulting in a slight market reaction.
Mid-session, corn futures for March are 7 ¢ lower at $ 5.56¾. May corn futures are 7¼ ¢ lower at $ 5.54½. New crop corn futures for December are 4¼ ¢ lower, at $ 4.54.
March soybean futures are 4¼ ¢ higher at $ 13.92. May soybean futures are 3¾ ¢ higher at $ 13.89. November futures for the new crop are 3¾ ¢ higher at $ 11.83.
March wheat futures are 7¾ ¢ lower at $ 6.48.
March soybean flour futures are $ 0.60 in the short term, lower at $ 436.00.
March soybean oil futures are 0.41 ¢ higher, at 46.04 ¢ per pound.
In foreign markets, the NYMEX crude market is $ 0.28 per barrel higher (+ 0.48%) at $ 58.25. The US dollar is lower and the Dow Jones Industrials is 2 points above (+ 0.01%), at 31,387 points.
US Carryout
On Tuesday, the USDA set the U.S. 2020/2021 soy carryout at 120 million bushels against the trade expectation of 123 million bushels and the January USDA estimate of 140 million bushels.
For corn, the USDA predicts final stocks for 2020/2021 at 1.50 billion bushels, against trade expectations of 1.39 billion bushels and the January estimate of 1.55 billion bushels.
Final US wheat stocks are set at 836 million bushels against the trade expectation of 834 million and the January USDA estimate of 836 million.
End of the World Actions
In its report, the USDA estimated final corn stocks for 2020/21 at 286.5 million metric tons against the trade expectation of 279.79 million metric tons and the January USDA estimate of 283 million tons.
For soybeans, the world’s final stocks are estimated at 83.4 million tons. vs. expected trade of 83.30 mmt. and the January USDA estimate of 84.31 million tonnes.
For wheat, the world’s final stocks are estimated at 304.2 million tons. vs. the trade expectation of 312 mmt. and the USDA January estimate of 313 mmt.
South American crop production
The USDA estimated soy production in Brazil 2020/2021 at 133.0 million tons. vs. the trade expectation of 133.0 mmt. and the January USDA estimate of 132 million tonnes.
For corn production in Brazil, it was estimated at 109 million tons. vs. the trade expectation of 108 mmt. and the January USDA estimate of 102.0 million tonnes.
For Argentina, the USDA estimated its soybean production at 48.0 million tons. vs. the trade expectation of 47.6 mmt. and the January USDA estimate of 48.0 mmt.
Argentine corn production is estimated at 47.5 million tons. vs. the trade expectation of 47.0 million tons and the January USDA estimate of 47.5 million tons.
Commercial Reaction
Peter J. Meyer, S&P Global Platts, head of grain and oilseed analysis, says the corn market was disappointed with an increase of just 50 million bushel in corn exports.
“Many, including S&P Global Platts, expected an increase of 150 million bushel after the record for Chinese purchases in late January, but the USDA World Board remains reactive rather than proactive,” said Meyer.
Meyer added: “The structural imbalance, demands less production, in China is now at 28.3 million tons. against our 29 million metric tons. forecast. We believe that this number could reach 32 million tons. next year, bringing corn imports from China to 30 million tonnes in 2021-22 against the current USDA estimate of 24 million tonnes for the current marketing year. The imbalance is more than 10 million MT annually, something that we believe will continue to grow. No change in South American corn production was expected. “
Soy was much less a story. The USDA increased US soybean exports by 20 million bushels, as expected. Soy production in Brazil and Argentina has not changed, says Meyer.
Sal Gilbertie of Teucrium Trading agrees that markets were disappointed by USDA’s corn usage figures, which were well below expectations in all categories.
“Soy remains tight, with the USDA pushing US soy export numbers to the upper limit of trade expectations. Soybeans can buy a few acres of corn if the estimates in this report remain constant until the March launch of WASDE, ”says Gilbertie.