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USDA Raises Corn Inventories Outlook Beyond Expectations

Stockpiles seen higher as usage declines.

The U.S. Department of Agriculture (USDA) raised its stockpiles outlook for corn, soybeans, and wheat all beyond expectations, though today’s reports contained few surprises.

Corn inventories at the end of the 2018-2019 marketing year on August 31 are pegged at 1.781 billion bushels, up from last month’s outlook for 1.736 billion, the USDA said. Analysts expected 1.744 billion bushels, according to Bloomberg.

Production held steady at 14.626 billion bushels, though imports were seen down by 5 million bushels, the USDA said. Total use was seen down by 50 million bushels to 15.03 billion, as the USDA lowered its outlook for the amount used to make ethanol by that amount.

The USDA’s projection on soybean inventories was unchanged at 955 million bushels, though analysts had said they expected a reduction to 940 million. Output is seen at 4.6 billion bushels, and total use is pegged at 4.107 billion bushels, both unchanged from the previous month, government data show.

Wheat inventories at the end of the 2018-2019 marketing year on May 31 were raised by the USDA to 974 million bushels, up from 949 million last month. The agency’s forecast for exports fell by 25 million bushels, accounting for the estimate reduction.

Cory Brantland, an analyst with Kluis Advisors, said that he didn’t see any surprises in the report, but that investors should stay disciplined, sell rallies, and watch narrowing cash basis levels.

“Going forward, without any new news, these markets will trade sideways,” he said.

At the close, the March corn futures finished ¾¢ higher at $3.84¾. May futures finished 1¢ higher at $3.92¼.
January soybean futures settled 5¼¢ higher at $9.15. March soybean futures closed 5½¢ higher at $9.28.

March wheat futures finished 4¼¢ lower at $5.21.

January soymeal futures settled 0.90¢ per short ton higher at $310.90. January soy oil futures closed 0.20¢ higher at 28.96¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.08 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 53 points lower.

While the USDA report was lackluster, trade tensions between the U.S. and China are just heating up. China is reportedly trying to finalize details to resume imports of U.S. soybeans, which would give prices a boost, Brantland said.

On the downside, however, Brazil and Argentina will start their soybean harvest in a few weeks, adding supply to the market.

Britt O½Connell, a cash adviser for Commodity Risk Management Group, also said the report was unsurprising, but noted that this was the first time since 2012 the USDA reduced usage in the September-to-December quarter vs. the prior year.

Global ending stockpiles of corn were pegged at 307.5 million metric tons, the USDA said, just below forecasts for 307.9 million, while soybean inventories were seen at 112.1 million tons, under estimates for 113.2 million tons.

World wheat stocks were pegged at 266.7 million tons, slightly higher than the 266.5 million tons estimated by analysts.

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