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Corn, Soybean ending stocks seen mostly rising in Thursday’s USDA report

Will corn demand numbers get tweaked, analyst asks.

INDIANOLA, Iowa -- As the USDA gets set to release its June Supply/Demand and World Production estimates Thursday, investors and analysts will eye any tweaks to corn demand.

The corn market has a seasonal tendency to hit yearly highs in June, but this year contract lows are being recorded.

On Thursday, the USDA will release its monthly reports at 11:00 a.m. CT.

Corn

The analysts’ pre-report estimates for U.S. old-crop corn carryout is 2.15 billion bushels, compared with the USDA’s May estimate of 2.098 billion.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says that the most intriguing part of the Supply/Demand report will be the old-crop corn balance sheet.

“Most specifically, what adjustments will the USDA make to corn demand. Starting with export demand, in the month of May USDA raised export expectations to 1.775 billion. Corn exports as of late have been strong and there is a chance that the USDA would make another revision higher,” O’Connell says.  

She added, “We would expect ethanol demand to once again be revised lower. While we have seen an uptick in fuel consumption, we have still not achieved pre-coronavirus levels.”  

With USDA’s current projections at 4.95 billion bushels of corn to be used for ethanol production, the U.S. would need to see ethanol demand down less than 5% for the balance of 2020.  

Feed consumption is the last large demand bucket, she says.  

“We’ve seen increases in this area. It’s warranted, given the increased time that livestock has spent in feed yards, etc.  As feed lots begin to work to being more current with marketings, that may not be a place where we can expect continued consumption. We expect little change to new-crop balance sheet as acre adjustments are traditionally made in the June planted acreage report,” O’Connell says. 

For U.S. new-crop corn carryout figures, the average analyst sees the USDA raising its estimate to 3.36 billion bushels vs. the May estimate of 3.31 billion bushels.

Soybeans

New-crop U.S. soybean ending stocks are expected to jump 30 million bushels, this month, vs. a May ending stocks estimate of 405 million bushels.

Analysts see the old-crop U.S. soybean ending stocks estimate at 577 million bushels vs. the USDA’s May estimate of 580 million.

“Soybean crush in the U.S. has been off to a record pace with each month publishing record crushings,” O’Connell says. With a record year factored in today’s balance sheet and crush margins tightening up, it may not be realistic to expect each month to achieve record levels. Soybean exports have been more promising as of late with China stepping in and buying more U.S. old-crop soybeans.” 

The Brazilian farmer has been a very aggressive seller this spring with the real trading at century lows.  

“With the Brazilian farmer reaching the end of his or her selling season and the real recovering 20% off its lows, this could open the door for further U.S. exports. Watching closely, but not betting on a revision higher,” O’Connell says.

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