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U.S. Crop Stocks Fall, Prices React Positively

World corn, soybean ending stocks inch upward.

DES MOINES, Iowa — While U.S. grain supplies slightly dwindle, world supplies mostly drop, too, according to the USDA Tuesday.

Farm futures prices pulled back from their daily highs, on the close.

At the close, the May corn futures finished 1¼¢ lower at $3.89¼. July futures finished 1¼¢ lower at $3.97¾.

May soybean futures closed 3¢ higher at $10.50. July soybean futures closed 2 3/4¢ higher at $10.60.

May wheat futures closed 1¼¢ higher at $4.92.

May soy meal futures finished $5.70 per short ton lower at $383.90. January soy oil futures settled 0.33¢ higher at 31.85¢ per pound. 

In the outside markets, the NYMEX crude oil market is $2.02 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 439 points higher.

U.S. Ending Stocks

In its April Supply/Demand and WASDE Reports, the USDA pegged the U.S. 2017/18 corn ending stocks at 2.182 billion bushels, compared with the average trade estimate of 2.189 billion bushels and its March estimate of 2.127 billion.

The U.S. 2017/18 soybean ending stocks were estimated at  550 million bushels vs. the average trade estimate of 574 million and the USDA’s estimate last month of 555 million bushels.

For wheat, the USDA pegged the 2017/18 U.S. ending stocks at 1.06 billion bushels vs. the average trade estimate of 1.036 billion bushels and the USDA’s March estimate of 1.034 billion.

usda-ending-stocks-april-2018

WORLD ENDING STOCKS

In its Tuesday report, USDA pegged the 2017/18 world corn ending stocks at 197.8 million metric tons vs. the average trade estimate of 197.3 million metric tons.

For soybeans, the world ending stocks estimate was set at 90.8 million metric tons vs. the average trade estimate of 92.9 mmt.

USDA sees the 2017/18 world wheat ending stocks at  271.2 million metric tons vs. the average trade estimate of 268.1 mmt.

2017/18 World Crop Production

For 2017/18, Brazil will produce 92.0 million metric tons of corn, compared with the average trade estimate of 92.7 mmt.

Brazil’s soybean output is pegged at 115.0 million metric tons vs. the average trade estimate of 115.3 mmt and the USDA’s March estimate of 113.0 mmt.

In Argentina, its farmers are expected to produce 33.7 mmt of corn, compared with the average trade estimate of 33.7 mmt, according to the USDA.

Argentina’s 2017/18 soybean output is pegged at 40.0 mmt. vs. the average trade estimate of 42.6 mmt. and the USDA’s March estimate of 47.0 mmt.

usda-south-american-production-april-2018

Sal Gilbertie of Teucrium Trading is not surprised with today’s government data.

“Not much to say about these numbers other than the dramatic reduction in Argentine soy production, but this was widely expected,” Gilbertie says. “The Argentine soy production reduction coupled with the healthy rise in soybean crushing in the U.S. did give soy markets some minor price support, but there were certainly no big surprises in today’s report.”

Gilbertie adds, “Projected feed reduction across both wheat and corn does seem inconsistent with current large herd and flock sizes, but this is probably a short-term statistical aberration.”

The focus from this point forward will be weather as planting activity increases over the course of the next several weeks, Gilbertie says.

Mike North, president of Commodity Risk Management Group, agrees that there were very few surprises in the reports.

“For the second quarter in a row, feed estimates were lowered following larger stocks figures. In total, 50 million bushels were reduced from feed numbers along with a 5-million-bushel reduction to industrial use. This combination elevates the balance sheet to 2.182 billion bushels,” North says.  

Offsetting this increase were the reductions in both Argentinian and Brazilian production. These estimates now stand at 33 and 92MT respectively, a loss of 5.5 MT combined.  

“Despite ongoing weather concerns in the Southern Plains, lower wheat feeding adds 30 million bushels to the balance sheet,leaving stocks to use above 50% and providing a significant buffer to potential weather stress going forward,” North says.

Since the US produces just 6% of world wheat totals, external balance sheets are much more important, North says.  

“That said, increases in carry-in estimates added to available world supplies," North says.

Perhaps the biggest shock was in soybeans, according to North.  “Analysts estimated that soybean stocks would be announced anywhere from 545 to 625 million bushels. The announcement was made at 550 million bushels, just over the lowest estimate. This was a reduction in usage of 5 million bushels - different than the presumption that stocks would grow in the wake of the larger than expected Quarterly Stocks report,” North says.

South American production fell in line with estimates.

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