USDA Report Holds Few Surprises

USDA Corn Forecast

• 2019/20 corn stocks were increased 5 million bushels to 2,103 million, below the average estimate of 2,150 million.
• A 46 million bushel decrease in production from the North Dakota resurvey was offset by a 50 million bushel reduction in corn used for ethanol.
• Carryout for 2020/21 was projected at 3,323 million bushels with the slightly larger carry-in and no changes to new crop demand.
• World ending stocks for 2019/20 were lowered to 312.9 million tonnes from 320.1 million last year, while 2020/21 stocks are projected at 337.9 million.

FBN’s Take On What It Means: The decrease resulting from the May resurvey of North Dakota production was larger than expected. The decrease of corn used for ethanol was expected. This report provided little direction and the next potential market mover will be the acreage report at the end of June.

USDA Soybean Outlook

• USDA slightly increased 2019/20 carryout to 585 million bushels, up 5 million from last month and above the 577 million expected.
• A 25 million bushel decrease in exports was mostly offset by an increase in crush and production lost in North Dakota.
• For 2020/21, USDA raised soybean crush by 15 million bushels and ending stocks decreased 10 million to 395 million after leaving exports unchanged.
• World supply/demand saw few changes and 2019/20 ending stocks were seen at 99.2 million tonnes down from 100.3 million, and 2020/21 stocks were pegged at 96.3 million tonnes.

FBN’s Take On What It Means: With few changes, this report is seen as neutral for soybean prices in the near term. But what is clear is that stocks are not expected to be as plentiful next year and there is less room for any reduction, either from increased demand or a production issue.

USDA Wheat Update

• USDA raised the winter wheat crop forecast to 1,266 million bushels from 1,255 million in May, which was 25 million more than the average estimate.
• Most of the projected increase comes from hard red winter wheat being raised to 743 million bushels from 733 million last month.
• The agency projected 2020/21 carryover at 925 million bushels compared with 909 million in the May report.
• World ending stocks were projected at 316.1 million tonnes, an increase of 6 million from last month and 20 million from last year, but most of the increase was due to China and India.

FBN’s Take On What It Means: While there are still some weather concerns in spots around the globe, the increase in the US winter wheat crop and world ending stocks are seen as bearish for the market.

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—Kevin McNew