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USDA/WASDE Data Left Mostly Unchanged - Markets Ignore Report

The corn market had little reaction to today’s numbers.

DES MOINES, Iowa -- The U.S. pile of soybeans is not changing much, while the corn stocks expected to end the marketing year about the same as expected a month ago, according to the USDA Tuesday.

As a result, the CME Group’s corn and soybean markets have little reaction.

At the close, the March corn futures ended 1¼¢ higher at $3.77. May corn futures finished 1¢ higher at $3.82.
 
Jan. soybean futures closed 4¢ higher at $9.01 3/4. March soybean futures finished 3¾¢ higher at $9.15¾.

March wheat futures closed 1¢ higher at $5.23½.

January soymeal futures finished $0.20 per short ton higher at $298.70. January soy oil futures closed 0.09¢ higher at 31.68¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.19 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 3 points higher.

U.S. Ending Stocks 2019-20

The U.S. is expected to have 1.910 billion bushels of corn, at the end of August 2020 (the end of the marketing year). That compares with the USDA’s November estimate of 1.9 billion bushels and the trade’s expectations of 1.91 billion.

For soybeans, the ending stocks are pegged at 475 million bushels compared with the trade’s expectations of 476 million bushels and the USDA’s November estimate of 475 million.

USDA pegged the U.S. 2019/20 wheat ending stocks at 974 billion bushels vs. the USDA’s previous estimate of 1.014 billion and the trade’s expectation of 1.01 billion.

U.S. 2019 Production

In its December Supply/Demand Report, the USDA pegged the U.S. corn crop at 13.661 billion bushels, unchanged from November’s estimate of 13.661 billion bushels and the trade’s expectation of billion.

For yield, the USDA sees it averaging 167.0 bu./acre vs. the government’s November estimate of 167.0.

The U.S. soybean output is pegged at 3.55 billion bushels vs. the avg. trade estimate of 3.550 billion bushels and the USDA’s November estimate of 3.55 billion.

The USDA sees the U.S. soybean yield averaging 46.9 bu./acre vs. the USDA’s November estimate of 46.9.

U.S. Harvested Acres

Also, the USDA estimates the U.S. 2019 corn harvested acres at 81.8 million unchanged from USDA’s November estimate of 81.8  million.

The U.S. 2019 soybean harvested acreage has been printed at 75.6 million vs. the USDA’s November estimate of 75.6 million.

2019/20 World Crop Production

In its report, the USDA pegged Brazil’s corn production at 101.0 million metric tons (mmt.) vs. the trade’s expectations of 100.9 mmt. and its previous estimate of 101.0 mmt.

Brazil’s soybean crop is expected to reach 122.0 mmt. vs. the trade’s expectation of 123.0 mmt. and the USDA’s November estimate of 122.0 mmt.

In Argentina, the USDA sees corn output at 50.0 mmt. vs. the trade’s expectation of 49.8 mmt. and the USDA’s previous estimate of 50.0 mmt.

Argentina’s 2019/20 soybean output is pegged at 53.0 vs. the trade’s expectation of 53.0 mmt. and the USDA’s November estimate of 53.0 mmt.

Trade Reaction

Greg Lumsden, product line leader, Cargill MarketGuide, says now that the report is out, most traders will quickly dismiss the numbers and renew their focus on trade, the January report (winter wheat acres/stocks), and wet forecasts for the UK and France, which will limit final seeding.
 
“Entering into the report, corn has been rangebound and lacking a strong fundamental story to work prices higher. Most market participants have been pricing in the fact that the USDA would change very little on this report, and that is exactly what we saw today,” Lumsden says.

Lumsden added, “Going forward, we still expect prices to slowly work higher based on seasonal demand, and higher usage rates due to lower test weight corn this year. Weather in South America, particularly southern Argentina, bears watching as early planted corn is coming under stress. Lastly, if a phase-one deal can be reached by U.S. and China, renewed optimism could generate some short covering and in turn cause prices to grind higher.”

The report’s soybean numbers were largely anticipated, he says.

“As a contrast to corn, beans have been steadily working higher entering into the December report. The last five trading sessions have seen beans rally around 30¢. Most of this was due to improving trade negotiations, some Chinese buying, and dryness in South America,” Lumsden says.

Moving forward, the market has the ability to continue to work higher if a phase-one trade deal secures more business and we still see dryness in Argentina, he says.

“With the funds positioned short, there is ample firepower for the soybean market to go higher if weather and trade offer a boost. Given China’s reliance on South American beans, the risks are heightened as they enter into their critical growing season,” Lumsden says.

Jason Roose, U.S. Commodities, says that investors will have to wait until the January 10 USDA report to get any new answers to the uncertainties in the grain market.

“All U.S. numbers for corn and soybeans were left unchanged from the November report. This could be viewed as support for corn, as all eyes were on lower corn exports. The increase in global supplies for corn, beans, and wheat was considered larger than expected but well known in current market. The lower U.S. wheat stocks in this report could be setting the stage for a lower production number in January,” Roose says.

Sal Gilbertie, Teucrium Trading owner, agrees that today’s report has very little to offer.

“Nothing of significance today, other than that even with an increase in Chinese corn production estimates, the world will still use more corn than it produces this year. That marks the third year in a row of global corn stock declines,” Gilbertie says.

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