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U.S. Corn Production, Supplies Fall, USDA Says

The report is seen as price-friendly for corn.

DES MOINES, Iowa — The U.S. corn crop production is falling along with supply estimates, according to the USDA.

Immediately following the report at 11:00 a.m. CT, the CME Group corn market jumped 10¢ per bushel, soybeans and wheat markets moved up slightly.

At the close, the July corn futures finished 12¢ higher at $4.27¾. Dec. corn futures closed 12½¢ higher at $4.47.
 
July soybean futures settled ¾¢ higher at $8.59¼. November soybean futures settled 1¼¢ higher at $8.87.

July wheat futures settled 10½¢ higher at $5.18.

July soymeal futures closed $1.00 per short ton higher at $314.40. July soy oil futures ended 0.16¢ lower at 27.22¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.04 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 27 points lower.

Jason Roose, U.S. Commodities, says that the corn market is well supported.

“The USDA Report, today, sent an aggressive signal today in the June Crop Production Report, lowering corn yields by 10 bushels, making it the largest reduction in history. In addition, in part due to adversity in spring planting, acres were also reduced by 3 million, which could be revised on June 28.”

Roose added, “Going forward, the weather will be closely monitored as these numbers today could fluctuate,” Roose says.

Corn Estimates

In its June Supply/Demand Report, the USDA pegged the U.S. 2019 corn acreage at 89.8 million, compared with the average trade estimate of 86.7 million acres. The average U.S. corn yield estimate came in at 166 bushels per acre, according to the USDA. That is lower than the average trade estimate of 172.40 bushels per acre and below the May estimate of 176 bushels per acre.

For corn, the USDA pegged U.S. 2019 production at 13.68 billion bushels vs. the trade’s expectation of 14.2 billion bushels and the USDA previous estimate of 15.03 billion.


Corn Ending Stocks

The government agency sees the U.S. 2018/19 corn ending stocks at 2.195 billion bushels compared with its May estimate of 2.095 billion bushels.

The USDA sees the U.S. 2019/20 corn ending stocks at 1.675 billion bushels compared with its May estimate of 2.485 billion bushels and the trade’s estimate of 1.917 billion bushels.

Soybeans

In its June Supply/Demand Report, the USDA pegged the  U.S. 2019 soybean acreage at 84.6 million, compared with the average trade estimate of 87.0 million acres. Meanwhile, the USDA esimates the average U.S. soybean yield at 49.5 bushels per acre. That estimate is slightly higher than the average trade estimate of 49.00 bushels per acre and equal to the May estimate of 49.5 bushels per acre.

For soybeans, the USDA pegged U.S. 2019 production at 4.15 billion bushels vs. the trade’s expectation of 4.12 billion bushels and the USDA previous estimate of 4.15 billion.


Soybean Ending Stocks

The government agency sees the U.S. 2018/19 soybean ending stocks at 1.070 million bushels compared with its May estimate of 995 million bushels.

The USDA sees the U.S. 2019/20 soybean ending stocks at 970 million bushels compared with its May estimate of 970 million bushels and the trade’s estimate of 983 million bushels.

Al Kluis, Kluis Advisors, says that the USDA report is friendly for the corn market.

“Corn numbers are price supportive, but bearish wheat numbers will keep a cap on corn’s rally,” Al Kluis, Kluis Advisors, says. “Let’s watch to see what happens at the close of today’s session.”

U.S. Wheat Production, Carryout

The USDA pegged the U.S. All Wheat 2019 production at 1.903 billion bushels vs. the trade’s expectations of 1.883 billion and the USDA’s May estimate of 1.897 billion.

The U.S. 2019/20 wheat carryout is estimated at 1.07 billion bushels vs. the average trade estimate of 1.11 billion and the May estimate of 1.14 billion.

2019/20 World Carryout

In its report, the USDA pegged the 209/20 world corn carryout at 290.5 million metric tons vs. the trade’s expectations of 304.96 mmt. and the May estimate of 314.71.

For soybeans, the 2019/20 world carryout is estimated at 112.7 met. vs. the trade’s estimate of 112.9 and the USDA’s May estimate of 113.09 met.

The world’s wheat carryout for 2019/20 is pegged at 294.3 mmt. vs. the trade’s estimate of 290 met. and the USDA’s previous estimate of 293.01.

Trade Response

Britt O’Connell, cash advisor for Commodity Risk Management Group, says that the USDA Report, today, has the corn market higher, wheat higher, and soybeans effectively unchanged on the day.  

“This month’s U.S. soybean supply and use projections for 2019/20 include higher beginning and ending stocks.  Beginning stocks are raised reflecting a 75-million-bushel reduction in projected exports for 2018/19 based on lower-than-expected shipments in May and a lower import forecast for China. Although planting progress has been slow for the soybean crop, no changes were made to either acres of yield as several weeks remain in that planting window,” O’Connell says.  

The season average price for soybeans was raised 15¢ reflecting higher corn prices. Global soybean supply was down .3 million tons to 355.4 million.  

“Net/net, no major surprises in soybeans, and that market will likely continue to hang on the ledge,” O’Connell says.

Corn had significant changes made it to its balance sheet.  

“In a very nontraditional move, the USDA cut planted acres by 3 million and 10 bushels of yield, taking production down from 1.5 mbu to 1.36 mbu. Changes to the demand side of the balance sheet saw feed and residual lowered 300 mbu and exports lowered 125 mbu. Ending stocks came in at 1.675 down significantly from 2.485 projection in May. The big watch point now will be if and how much they lower planted acres in the June 28 report,” O’Connell says.

Dustin Johnson, AgYield, says that the market severely underestimated the USDA’s ability to lower yield early.

“The USDA did the same in 1995, not surprising to see them lower it based on their methodology in the past. We still think production could come down from 13.680 billion,” Johnson says.

With this report, it would not be surprising to see corn take out the $4.54 high in Dec. futures, according to Johnson.

Johnson added, “Soybean production left unchanged is probably fair, for this time of year, and uncertainty about how many acres of corn could roll into beans. Also, they have a tough job on the demand side with such uncertainty about China demand.”

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