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USDA Drops World Corn Ending Stocks, Markets Go Higher

U.S. cropsize estimates left unchanged, according to the USDA.

DES MOINES, Iowa — The U.S. corn and soybean farmers will produce large crops in 2018, while corn ending stocks get lowered, according to the USDA.

As a result of Thursday’s USDA July Supply/Demand and WASDE Reports, the CME Group’s corn and soybean markets reacted higher.

At the close, the September corn futures finished 5 3/4¢ higher at $3.45 3/4. December futures finished 6¢ higher at $3.59 1/4.

August soybean futures ended 3/4¢ higher at $8.33 3/4.  November soybean futures finished 1¢ higher at $8.49 1/4.

September wheat futures settled 12 3/4¢ higher at $4.84 1/2.

August soymeal futures ended $0.40 per short ton higher at $330.90. August soy oil futures finished 0.16¢ lower at 28.27.

In the outside markets, the NYMEX crude oil market is $0.14 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 200 points higher.

U.S. 2018 Avg. Yield

On Thursday, the USDA pegged the U.S. 2018 corn production at 14.2 billion bushels, compared with the trade’s expectations of 14.3 billion bushels and the USDA’s June estimate of 14.04 billion.

The USDA estimated the average U.S. corn yield at 174.0 bushels per acre, compared with the average trade expectation of 174.9 bushels per acre and the government’s June estimate of 174.0 bushels per acre.

The U.S. 2018 soybean output has been pegged at 4.31 billion bushels, vs. the trade’s expectations of 4.32 billion bushels and the USDA’s June estimate of 4.28 billion bushels.

The U.S. soybean crop is expected to produce an average yield of 48.5 bushels per acre vs. the average trade expectation of 48.6 bushels per acre and the USDA’s June estimate of 48.5 bushels per acre.

U.S. 2018 Avg. Yield
  USDA July Trade Est. USDA June
corn 174.0 174.9 174.0
soybeans 48.5 48.6 48.5

U.S. 2017/18 Ending Stocks

In its report, the USDA pegged the old-crop U.S. corn ending stocks at 2.027 billion bushels vs. the average trade estimate of 2.107 billion bushels and the USDA’s June estimate of 2.102 billion bushels.

The old-crop soybean ending stocks are pegged Thursday at 465 million bushels vs. the average trade’s estimate of 507 million and the USDA’s June estimate of 505 million.

U.S. 2017/18 Ending Stocks
 

USDA July

Trade Est. USDA June

soybeans

465 mill. 507 505
corn 2.027 bill. 2.107 2.102

U.S. 2018/19 Ending Stocks

For corn, the USDA sees new-crop ending stocks at 1.55 billion bushels vs. the average trade estimate of 1.712 billion bushels and the June estimate of 1.577 billion.

The new-crop soybean ending stocks are estimated at 580 million bushels vs. the trade’s estimate of 471 million and the USDA’s June estimate of 385 million.

In its report, the USDA pegged the 2018/19 marketing year wheat ending stocks at 985 million bushels vs. the trade’s estimate of 973 million and the USDA’s June estimate of 946 million.

World Ending Stocks 2017/18

The USDA pegged the world ending corn stocks at 191.7 million metric tons vs. the avg. trade estimate of 191.4 million metric tons and the USDA’s June estimate of 192.7 mmt.

For soybeans, the world stockpiles at the end of the 2017/18 marketing year are expected to total 96.0 mmt. vs. the average trade estimate of 91.7 mmt. and the USDA’s estimate a month ago of 92.5 mmt.

The world’s wheat ending stocks are pegged at 273.5 mmt. vs. the avg. trade estimate of 272.4 mmt. and the USDA’s previous estimate of 272.4 mmt.
 

World Ending Stocks 2017/18
  USDA July Trad Est. USDA June
Corn 191.7 191.4 192.7
Soybeans 96.0 91.7 92.5
Wheat 273.5 272.4 272.4

Trade Reaction

Sal Gilberti, Teucrium Trading owner, says that the only real deviations from expectations in this report are lower levels of global corn stocks and higher global soybean stocks.

“It appears the USDA has done an exceptionally thorough job of anticipating the effects of Chinese tariffs on global soybean markets, but the elevated ending stocks levels do come as a bit of a surprise. This report appears to be a continuation of the market anticipating perfection in the coming harvest, which means the focus from this point on will be whether or not yields can maintain trend line predictions,” Gilbertie says.

Brian Rydlund, CHS Hedging market analyst, says that today’s reports are slightly friendly.

“Corn got too cheap, so the report seems friendly,” says Rydlund. With the yields estimates untouched, no old-crop soybean supply changes, yet exports raised and carryout cut, the market has a head scratcher.”

Jason Roose, U.S. Commodities analyst, says that today's USDA crop report was negative for the soybean market, positive corn.

“With the USDA dropping soybean exports by 250 million bushels, this was lower than most trade estimates. Corn export estimates were increased, and ending stocks lowered slightly. Yields were left unchanged on corn and soybeans which was considered slightly friendly, considering that the ideal weather may already be dialed in the market,” Roose says.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that the soybean data were as bearish as expected or more.  

“Production increased in line with the acreage change, but the demand hammered because of the China tariffs.  The export demand cut was big,” Scoville says.

He added, “Regarding corn data, I’m not sure what is going on there, but I agree with the bottom line that ending stocks next year are coming down.  But to increase residual and cut ethanol for next year seems a bit strange to me.”  

Also, little effect from the export side which makes sense, as even with the tariff moves the big customers are still buying US corn and this will go on well into next year, Scoville says.  

“Demand is big for corn and will stay that way.  Wheat seems to be all about the world data showing less ending stocks and the U.S. data showing a bit more demand.  The reaction seems big when looking at the data.  Corn might be bottoming and maybe beans will today, as I doubt we get anything more bearish than this in the stats,” Scoville says.

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