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USDA Confirms Larger Grain Stocks, Markets Drop

Soybeans pushed up 11¢ on yield drop, smaller ending stocks.

DES MOINES, Iowa — The stockpiles of all U.S. grains continue to get bigger, according to the USDA.

In its January Crop Production, Quarterly Grain Stocks, and Supply/Demand Reports Friday, the USDA pegged the supplies higher and upped its 2017 corn crop size.

As a result, the CME Group futures market reacted mostly negatively to the USDA numbers, with the exception of the soybean market.

At the close, the March corn futures finished 2½¢ lower at $3.46¼. May futures ended 2¼¢ lower at $3.54¾.

March soybean futures settled 10¢ higher at $9.60½.  May soybean futures closed 11¢ higher at $9.72.

March wheat futures ended 12¾¢ lower at $4.20½.

March soy meal futures closed $3.90 per short ton higher at $317.00. January soy oil futures ended 0.02¢ lower at 33.13¢ per pound. 

In the outside markets, the NYMEX crude oil market is $0.42 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 180 points higher.

Al Kluis, Kluis Commodities, says that the report is negative to the markets. “But not a violent reaction. We will be watching now what the South American crop will do going forward. We also want to watch the funds’ activity on their short trading positions.”

U.S. Average Yield

In its report Friday, the USDA pegged the U.S. 2017 corn crop’s average yield at 176.6 bushels per acre, compared with the average trade estimate of 175.4 bushels per acre and its estimate of 175.4 last month.

For soybeans, the final U.S. average yield is estimated at 49.1 bushels per acre vs. the average trade estimate of 49.5 bushels an acre and the USDA’s estimate of 49.5 last month.

usda-yield-january-2018

U.S. Ending Stocks

The U.S. 2017/18 corn ending stocks estimate is pegged at 2.477 billion bushels vs. the average trade estimate of 2.43 billion and the USDA’s December estimate of 2.437 billion bushels.

For soybean ending stocks, the USDA sees 470 million bushels at the end of the 2017/18 marketing year, while the trade’s average estimate is 479 million. Last month, the USDA’s estimate was 445 million bushels.

The USDA sees the U.S. 2017/18 wheat ending stocks at 989 million bushels vs. the average trade estimate of 959 million and last month’s USDA estimate of 960 million.

usda-ending-stocks-january-2018

U.S. December 1 Stocks

In its Quarterly Grain Stocks Report, the USDA pegged December 1 corn stocks at 12.516 billion bushels vs. the average trade estimate of 12.42 billion bushels. Last year, USDA pegged December 1 corn stocks at 12.3 billion.

The U.S. soybean December 1 stocks are estimated at 3.157 billion bushels vs. the average trade estimate of 3.17 billion.

Trade Response

Jason Roose, U.S. Commodities grain analyst, says that today’s quarterly grain stocks and crop production report continues to tell us there is no shortage of grain in the world.

“The USDA increased the corn production by 26 million bushels, increased the yield to 176.6, and increased world ending stocks from 204.1 to 206.6 mmt. Quarterly stocks also confirmed that demand was lower on corn, beans, and wheat. The larger increase in wheat stocks with lower feed and residual use will limit upside,” Roose says.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says the USDA report showed that soybean ending stocks are lower and corn is higher, mostly on demand concerns. 

“USDA should have satisfied the bean demand bears with its reduction in demand, but the production is more important and kept the stocks from going up. We expected less corn production but did not get it and that has pushed corn a little lower,” Scoville says. 

Scoville adds, “The other big surprise is the wheat seedings that were higher than expected in every class.  That was the big bearish surprise on the report. I doubt corn goes down much, and beans can hold and come back a bit on these estimates. Wheat, I think, remains a weather market but the higher planted area does hurt the upside potential.”

Brian A. Rydlund, CHS Market Analyst, says the report’s surprise came in the wheat category.

“The eye-poppers include wheat acres not down as much as the trade thought or talked. All wheat acres are down just slightly from last year and futures sell off on the news,” Rydlund says.

Sal Gilbertie, Teucrium Trading, says that wheat prices are down over 2% largely because U.S. wheat planted acres were higher than expected, but the global balance sheet for wheat is largely unchanged.

“As a result, current price declines could be temporary, because total world wheat consumption is still estimated to be the highest on record at 741.7 million metric tons.”

Gilbertie adds, “Soybean prices are higher because of record global demand again this year, which the markets see as an unrelenting trend.”

USDA Report Day

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