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USDA Tightens U.S. Soybean Ending Stocks, Supplies Remain Big

The report is seen as bearish for grain markets.

DES MOINES, Iowa --The U.S. soybean ending stocks continue to tighten, according to the USDA July Supply/Demand Report Wednesday.

However, yield estimates remain unchanged and the supply numbers remain big, giving the trade a negative signal. As a result, the markets trade lower following the report.

At the close, the September corn futures finished 16¼¢ lower at $3.85; December futures finished 15½¢ lower at $3.98¾.

August soybean futures ended 8½¢ lower at $10.20¾, and November soybean futures closed 9¼¢ lower at $10.34.

September wheat futures settled 16¢ lower at $5.37.

August soy meal futures finished $2.70 per short ton lower at $336.00. August soy oil futures closed 0.29¢ lower at 33.52¢ per pound. 

In the outside markets, the Brent crude oil market is $0.60 per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 134 points higher.

Brian Rydlund, CHS Hedging market analyst, says the trade’s attention is already back on weather.

“I’m a a bit surprised the USDA didn’t adjust yields, especially corn. But this data is as of July 1, supposedly, and things have changed since then,” Rydlund says.

“Ending stocks were bearish numbers, as numbers for next year’s corn carryout at 2.325 billion bushels are higher than first thought,” adds Rydlund. We go back to weather now. The market had a knee-jerk response to data, breaking at 11 a.m. While corn sold off, it has come back already. For soybeans, prices firmed, after falling immediately after the report. So now, we ignore the report.”

CORN

In its report, the USDA pegged the U.S. 2016/17 corn ending stocks at 2.37 billion bushels vs. USDA’s last month’s estimate of 2.29 billion bushels and the trade’s expectation of 2.32 billion.

For 2017/2018, the U.S. corn ending stocks are estimated at 2.32 billion bushels vs. the average estimate of 2.181 billion bushels and last month’s 2.11 billion.

SOYBEANS

For 2016/2017, U.S. soybean ending stocks at 410 million bushels vs. the trade’s estimate of 430 million and USDA’s June estimate of 450 million.

For 2017/2018, the USDA sees the U.S. soybean ending stocks at 460 million bushels vs. the trade’s estimate of 495 million bushels and USDA’s June estimate of 495 million.

WHEAT

U.S. 2017/2018 wheat ending stocks are pegged at 938 million bushels vs. the trade’s estimate of 876 million and USDA’s June estimate of 924 million.

usda-ending-stocks-july

More TRADE REACTION

  • Pete Meyer, PIRA Energy senior grain analyst:  “With the exception of wheat, the July reports are fairly mundane as the USDA’s reliance on its July-centric weather models for corn and soybean yields make no changes until August. While the market should know this, it’s surprising how many still “hoped” for a yield adjustment. 2016/’17 corn stocks rising was another nonevent as the recently-released Quarterly Stocks report called into question Feed usage. In soybeans, an increase in export expectations may be considered a bit of a surprise given the size of South American production. The main event was spring wheat production, which has been devastated by the drought in the Dakotas.  In our opinion, spring wheat production is susceptible to further cuts, possibly below 400 million bushels. With no real clarity, the corn and soybean markets are back to watching weather forecasts as they await the first yield revision coming in early August.”
  • Sal Gilbertie, Teucrium Trading: “Today’s report will help keep farmer hopes of high per-acre corn yields alive a little while longer, which will put every weather forecast for the next few weeks under intense scrutiny. Persistent soybean demand was confirmed again, and we’ve finally received official recognition of the Northern Plains drought having deeply affected the winter wheat crop. Weather will control price direction in all the major grain markets from this point onward.”
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