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USDA leaves soybean supplies unchanged, tightens corn | Wednesday, May 12, 2021

WASDE numbers on South America’s crops offer no surprises, analyst says.

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

As a result, the CME Group’s farm markets changed little from how they were trading before the release of the report.

At the close, the July corn futures finished 7½¢ lower at $7.14¼. New-crop September futures closed 13¼¢ lower at $6.21½. December corn futures closed 18¾¢ lower at $5.93. 
 
July soybean futures closed 27¾¢ higher at $16.42½. August soybean futures settled 19¢ higher at $15.72½. New-crop November soybean futures ended 12¾¢ higher at $14.43¼.

July wheat futures closed 12¢ lower at $7.29¾. 

July soymeal futures closed $1.80 per short ton higher at $448.80.

July soy oil futures ended 1.60¢ higher at 66.40¢ per pound.

In the outside markets, the NYMEX crude oil market is +0.78 higher (+1.19%) at $66.06. The U.S. dollar is higher, and the Dow Jones Industrials are 446 points lower (-1.30%) at 33,822 points.

2020/2021 U.S. ENDING STOCKS

For corn, the USDA pegged the U.S. old-crop ending stocks at 1.25 billion bushels vs. the trade estimate of 1.20 billion bushels and the USDA’s April estimate of 1.35 billion.

For soybeans, the U.S. ending stocks were 120 million bushels vs. the April estimate of 120 million bushels. The trade expected the USDA to print 117 million bushels today.

In its report, the USDA pegged the U.S. wheat ending stocks at 872 million bushels vs. the trade’s expectation of 846 million and the USDA’s previous estimate of 852 million.

2021/2022 U.S. Ending Stocks

This the first 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 1.50 billion bushels vs. the trade estimate of 1.34 billion bushels. 

For soybeans, the U.S. ending stocks were 140 million bushels vs. the trade expected the USDA to print 138 million bushels today.

In its report, the USDA pegged the U.S. wheat ending stocks at 774 million bushels vs. the trade’s expectation of 730 million. 

U.S. Wheat Production 2021/2022

In its report, the USDA pegged the U.S. All Wheat production at 1.872 billion bushels v s. the trade's expectation of 1.87 billion bushels.

2020/2021 WORLD ENDING STOCKS

On Wednesday, the USDA pegged the world’s corn ending stocks at 283 million metric tons (mmt.) vs. the trade’s expectation of 279.0 mmt. and the USDA’s April estimate of 283.8 mmt.

For soybeans, the world ending stocks are estimated at 86.6 mmt. vs. the trade’s expectation of 86.5 mmt. and the USDA’s April estimate of 86.87 mmt.

For wheat, the USDA pegged world ending stocks at 294.7 mmt. vs. the trade’s expectation of 295.0 mmt. and the USDA’s previous estimate of 295.5 mmt.


2020/2021 WORLD CROP PRODUCTION

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

For corn, Brazil’s output is seen at 102.0 mmt. vs. the trade’s expectation of 103.0 mmt. and the USDA’s April estimate of 109.0 mmt.

For Argentina’s soybean output, the USDA pegged its crop at  47.0 mmt. vs. the trade’s expectation of 46.6 mmt and the USDA’s April estimate of 47.5 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 46.6 mmt.

Trade Reaction

Sal Gilbertie, Teucrium Trading, say that this report does little to quell the perceptions that grain inventories are too tight.

“That is especially true for the soybean excess days supply, which remains remarkably low even at 140 million bushels next year. In essence, the USDA has just confirmed that the grains balance sheet will remain tight with trend line yields. Farmers will have to burst their bins with well above average yields this season to loosen supplies,” Gilbertie says.

Britt O’Connell, ever.ag, says today’s WASDE report didn’t produce the type of long-lasting fireworks that some were anticipating.  

“Old-crop soybeans saw no change and old crop came in right at the average trade estimate. While we immediately saw a bit of a sell-off, old-crop corn should remain well supported given the strength of the cash market and tight supplies. New-crop corn and soybeans also came in near what the trade was expecting at 1.507 billion and 140 million respectively,” O’Connell says.  

She added, “As we look forward, there is very little room for any error by way of production in 2021. Should there be any real or perceived threats to yield, both markets will be in default rally mode. Should soybean planted acres not change from the initial March estimates, a mere 2 bushels off of trendline yield and the balance sheet in theory would be in negative territory. Unlike the price of oil, the soybean balance sheet can’t go negative... you can’t use soybeans you don’t have. While corn has a little more room for error, it does present the tightest May ending stocks projection we have seen in over a decade.”  

“The corn to soybean ratio would lead you to believe that corn wanted more acres, moving from 2.5:1 to 2.3:1,” she says. “Should corn get more acres in the June 30 planted acres report, the air would be less thin,” O’Connell says.

Jack Scoville, PRICE Futures Group, says that USDA found production more or less in line with the trade, but less demand for somewhat higher-than-expected ending stocks estimates.

“USDA has been very conservative in its demand side for the U.S. all along, and it looks like they will keep with that program for the coming year. Brazil corn production was down but not enough. Still a ways to go but this is a realizing drought so USDA is fine where it was as long as the bias is for less production down the road. They were lower than CONAB, Brazil’s governmental agency, after all,” Scoville says.  

Scoville added, “Trade reaction is a little negative, but not bad considering the rally we have seen and the negative numbers. I have no real further insight into this mess – been kind of busy! But I do think that USDA will be forced to change the demand side after a while, but maybe not much until next year. The numbers for 2021 were OK,” Scoville says.

Jason Roose, U.S. Commodities, says that the WASDE report gave the first look at the new-crop supply demand estimate for the grains, with old-crop stocks tight for corn and soybeans and with a price premium that we have not seen for years.

“With 21/22 corn ending stocks at 1.507 billion bushels and world corn ending stocks at 292 million metric tons, these were considered not as tight. Brazil’s corn crop at 102 mmt is also lower, but larger than most estimates. Soybeans continue to surge in price with 21/22 stocks still tight at 140 million, with surging veg oil demand worldwide giving short-term support,” Roose says. 

Roose added, “Many fundamental factors will be key in all grains the next 30 to 60 days including the U.S. growing weather, acreage numbers, Brazil corn harvest, and whether China continues to purchase grain,” Roose says.

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