The U.S. 2020 corn and soybean crops will be larger than previously thought, USDA reports.
On Wednesday, the USDA published its August U.S. Supply / Demand and World Production (WASDE) reports at 11 a.m. CT.
Initially, the CME Group’s farm markets were submerged. According to the report, maize went up ¼ ¢, soybeans 3 ¢ down, and wheat also fell.
At the end of the Sept. corn futures 3 ¢ higher at $ 3.14 1/2. December corn futures ended 3 1/4 ¢ higher at $ 3.27 1/4.
Sept. soyabean futures regulated 10 ¢ higher at $ 8.80 1/2. November soybean futures closed 9 1/2 ¢ higher at $ 8.83 1/2.
Sep. wheat futures some 3 3/4 ¢ lower at $ 4.91 3/4.
Sep. soymeal futures regulated $ 0.10 per short ton higher at $ 284.20. Sept. Futures of soybean oil closed $ 0.94 cents higher at 31.56 ¢ per pound.
In foreign markets, the NYMEX crude oil market is $ 1.11 per barrel higher at $ 42.72. The US dollar is lower, and the Dow Jones Industrials are 288 points higher.
US Production
In its report, the USDA fixed the U.S. average corn yield at 181.3 bushels per acre vs. the average trade estimate of 180.5 bu./acre and the previous USDA estimate of 178.5 bu./acre.
The U.S. estimate for corn production came in at 15.27 billion bushels vs. the trade expectation of 15.17 billion bushels and the USDA in July estimate of 15.0 billion bushels.
For soybeans, the estimate of U.S. yields from the average 2020 pegged at 53.3 vs. the trade expectation of 51.2 bu./acre and the USDA’s July estimate of 49.8 bu./acre.
U.S. soybean production is estimated at 4.42 billion bushels vs. the trade expectation of 4.2 billion and the previous estimate of the USDA of 4.13 billion.
If realized, these yields would set extremely high records for corn and the second largest for soybeans.
American duck supplies
On Wednesday, the USDA estimated the U.S. corn old-growth end stocks at 2.22 billion bushels vs. the trade expectation of 2.26 billion and the USDA in July estimate of 2.24 billion.
For soybeans with old-growth, the USDA throughput hangs at 615 million bushels vs. the trade expectation of 618 million and the USDA in July estimate of 620 million.
2020/2021 US Ending Stocks
The USDA sees U.S. corn fines at 2.75 billion bushels vs. the trade expectation of 2.82 billion and the previous estimate of the USDA of 2.64 billion.
For soybeans, the final supplies of the new crop are estimated at 610 million bushels vs. the trade expectations of 526 million bushels and the USDA in July estimate of 425 million.
The US 2020/2021 wheat-end stocks are fixed at 925 million bushels vs. the trade expectations of 948 million and the USDA in July estimate of 942 million.
Trade reaction
Britt O’Connell, Cash Advisor for Commodity Risk Management Group, says the report’s data does not cause much volatility in the markets.
“Despite higher finite projections projected for maize and soybeans 2020/21, both markets are earning higher. The U.S. corn crust is expected to increase to 15.3 billion bushels with an increase in yield to 181.8 bpa. Part of the production increase was offset by larger projected feed usage and exports; however, final stocks are still being increased to 2.8 billion bushels.
O’Connell added, “With lower prices and weakness in the US dollar, corn is likely to remain competitively priced. Soybean yields were increased to 53.3 bpa, pushing ending supplies to 610 million bushels. US crush and exports were higher “Despite the bearish numbers, the market is moving higher, indicating that the published numbers were within trading expectations.”
Jack Scoville, PRICE Futures Group, says the report was negative for prices.
“The USDA estimates the growth as high as expected by the trade. Consistent with most trading expectations were inventory closures and South American production forecasting. So, we got a little relief bounce after the release of the report, but the general bearish sentiment and numbers keep prices overall weak. The trade will now expect the production forecast to increase in future reports. That said, prices could remain weak overall, “says Scoville.
Sal Gilbertie, Teucrium Trading, says today’s USDA report is being ignored.
“The USDA has a habit of overestimating yields in the August report, and with Monday’s intense storm damage still being assessed, the blockbuster’s yields in the current report are largely ignored. Most of the trade will wait to see what warning actually happened, and all eyes will be on Chinese buying, which has been robust over the past several weeks. What would be a bearish report is overwhelmed by factors, and the markets are holding up post report well, ”says Gilbertie.
Jason Roose, US Commodities, says this August report is different from last year.
“The difference is that the expectations for an increase in yield, production and export for maize and soybeans eliminate any shock this year, with increased yields for maize of 3.3 bushels and a soybean yield of 3.5 bushels. Plus, production increases in both corn and soybeans left very small bullish surprises on this report. But the key to the current release numbers is how much of the premium is subscribed. With 2019-ending supplies in the world lower than expected for corn and soybeans, combined with the weaker dollar, that scenario could offset larger end stocks, “says Roose.
