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USDA data is market-friendly for corn, bearish soybeans

The U.S. soybean ending stocks were higher than the trade expected.

The U.S. old-crop corn supplies dip, soybean supplies left unchanged, creating mixed market reaction, according to the USDA.

On Thursday, the USDA released its June Supply/Demand and World Production estimates.

As a result, the corn market jumped up while soybean prices fell, following the report's release.

At the close, the July corn futures finished 8 1/4¢ higher at $6.99. New crop September futures closed 6 1/4¢ higher at $6.38 1/4. December corn futures settled 6 3/4¢ higher at $6.16 1/2. 
 
July soybean futures closed 18 1/4¢ lower at $15.44. August soybean futures closed 13¢ lower at $15.10. New crop November soybean futures ended 11 1/4¢ higher at $14.59 1/4.

July wheat futures closed 1/4¢ higher at $6.82 1/4. 

July soymeal futures settled $4.80 per short ton lower at $381.60.

July soy oil futures closed $1.13 lower at 70.46¢ per pound.

In the outside markets, the NYMEX crude oil market is +0.35 higher (+0.50%) at $70.31. The U.S. dollar is higher, and the Dow Jones Industrials are 74 points higher (+0.22%) at 34,521 points.

2020/2021 U.S. ENDING STOCKS

For corn, the USDA pegged the U.S. old-crop ending stocks at 1.10 billion bushels vs. the trade estimate of 1.20 billion bushels and the USDA’s May estimate of 1.25 billion.

For soybeans, the U.S. ending stocks were 135.0 million bushels vs. the May estimate of 120 million bushels. The trade expected the USDA to print 122 million bushels today.

In its report, the USDA pegged the U.S. wheat ending stocks at 852 million bushels vs. the trade’s expectation of 869 million and the USDA’s previous estimate of 872 million.

2021/2022 U.S. Ending Stocks

This the second time the USDA has pegged the new marketing year's ending stocks.

For corn, the USDA pegged the U.S. new-crop ending stocks at 1.35 billion bushels vs. the trade estimate of 1.42 billion bushels and the May estimate of 1.50 billion bushels. 

For soybeans, the U.S. ending stocks were 155 million bushels vs. the trade that expected the USDA to print 146 million bushels today. In May, the USDA's estimate was 140 million.

In its report, the USDA pegged the U.S. wheat ending stocks at 770 million bushels vs. the trade’s expectation of 783 million and compared with the May estimate of 774 million bushels. 

2020/2021 WORLD ENDING STOCKS

On Thursday, the USDA pegged the world’s corn ending stocks at 280.6 million metric tons (mmt.) vs. the trade’s expectation of 280.0 mmt. and the USDA’s May estimate of 283.5 mmt.

For soybeans, the world ending stocks are estimated at 88.0 mmt. vs. the trade’s expectation of 87.4 mmt. and the USDA’s May estimate of 86.5 mmt.

For wheat, the USDA pegged world ending stocks at 293.5 mmt. vs. the trade’s expectation of 294.0 mmt. and the USDA’s previous estimate of 294.6 mmt.

2021/2022 World Ending Stocks

On Thursday, the USDA pegged the world’s corn ending stocks at 289.4 million metric tons (mmt.) vs. the trade’s expectation of 289.0 mmt. and the USDA’s May estimate of 292.5 mmt.

For soybeans, the world ending stocks are estimated at 92.6 mmt. vs. the trade’s expectation of 91.4 mmt. and the USDA’s May estimate of 91.1 mmt.

For wheat, the USDA pegged world ending stocks at 296.8 mmt. vs. the trade’s expectation of 294.0 mmt. and the USDA’s previous estimate of 294.9 mmt.


2020/2021 WORLD CROP PRODUCTION

On Thursday, the USDA pegged the 2020/2021 Brazilian soybean production at  137.0 mmt vs. the trade’s expectation of 136.1 mmt and the USDA’s estimate last month of 136.0 mmt.

For corn, Brazil’s output is seen at 98.5 mmt. vs. the trade’s expectation of 97.32 mmt. and the USDA’s May estimate of 102.0 mmt.

For Argentina’s soybean output, the USDA pegged its crop at 47.0 mmt. vs. the trade’s expectation of 46.1 mmt and the USDA’s May estimate of 47.0 mmt.

Argentina’s 2020/2021 corn crop is pegged at 47.0 mmt vs. the USDA’s previous estimate of 47.0 mmt. and the trade’s expectation of 47.04 mmt.

Trade Response

Jack Scoville, PRICE Futures Group, says that the report was bullish corn and bearish beans from the ending stocks estimates.

"Corn cut more than expectations but beans in line. No changes to the production side and there should not have been.  Way too early in the growing year for that.  Corn demand was impressive, while the soybean demand has been slacking off and the USDA showed this, today.  Corn should stay higher all day, beans might recover but not sure," Scoville says.

Sal Gilbert, Teucrium Trading, says that the report came in as expected.

"Ending stocks are raised slightly for soybeans, but old crop corn along with old and new crop wheat were all minimally lower than expectations. There isn’t much in this report that’s newsworthy, which may mean prices could pull back slightly due to a lack of any new bullish impetus in the markets. Overall grain tightness is confirmed in this report; weather will drive volatility on grain prices from this point forward."

PJ Quaid, independent grain trader, says that the report weakened the markets.

"2020/2021 corn stocks came in below the average estimate, with ethanol usage up by 75 million to 5.05 billion bushels. For soybeans, the numbers were above average estimates and Brazil's estimate was above. So, all of that is a little bearish. 

Quaid added, "The market is razor thin. July got up to $7.17 1/2 and Dec. futures got up to $6.28 1/4. The market was stronger before the numbers, now it is taking a little breather. Old crop prices are gaining on new crop prices."

Peter J. Meyer, S&P Global Platts, head of grain and oilseed analytics, says that the market really didn’t learn much in the June WASDE, as investors await the Acreage report in 20 days. 

“Old crop ethanol demand was raised by 75 million bushels given higher production and record RIN prices makes sense, and was probably the only surprise in the report as exports were also raised by 75 million bushels given the pace of export sales.  In the end, a 150 million bushel reduction in old crop carryout was larger than expected, but warranted.  No changes to new crop except for the lowering of beginning stocks.  

Meyer added, "Soybean crush was lowered slightly, increasing the old crop carry out, but next year’s supply remains tight.  For now, it’s back to watching the weather while the market waits for updated acreage at the end of the month.," Meyer says.

Britt O'Connell, ever.ag, says that the USDA dropped this year's corn carryout by 150 million bushels, whereas the average trade estimate coming into the report was just 50 million bushel.  

"In order to achieve this the USDA added 75 million bushels to both the ethanol demand and exports. Meanwhile, the new crop carryout was lowered by the same 150 million bushels due to a lower carry in," O'Connell says.

She added, "Old crop soybean carryout was increased for the first time in many months to 134 million bushels.  The new crop soybean carryout was increased by the same amount."  

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