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Agrivisor Market Recap

 
Friday, January 10, 2020
The early portion of today’s trade was spent getting final positions in place ahead of the USDA data release. Export sales were also released this morning and were poor across the board. This caused a round of pre-report selling in the market, as did elevated rains chances for the dry regions of South America. Additional pressure came from private estimates for a larger Brazilian soybean crop than the official number that was just released. Uncertainty over the Phase 1 trade deal were also negative for trade as President Trump indicated the agreement might not be signed next week. 

The long-awaited January USDA reports were released today, and market reaction was somewhat muted given the pre-report hype. Corn production caught trade by surprise as production increased from November when a decrease had been expected. The average US corn yield is now estimated at 168 bushels per acre, 1 bushel more than the previous estimate. Even with a harvested acreage decline of 315,000 acres, this was enough to give the United States a 13.69 billion bu crop estimate, 30 million bu above the last projection. 

As with corn, the USDA increased its soybean yield estimate this month to 47.4 bpa compared to 46.9 bpa in November. We did see a reduction to harvested acres of 626,000 which countered the higher yield per acre. This gave us a crop estimate of 3.56 bbu, up 10 mbu from November. 

The corn complex did see some significant changes to usage. Feed demand increased a huge 250 mbu which was needed to offset the lower export forecast. Corn exports were reduced by 75 mbu and are now the least amount since the drought year of 2012/13. Changes to corn usage were enough to give us a 1.89 bbu carryout estimate, 20 mbu under the previous prediction. No changes were made to soybean demand leaving ending stocks estimated at 475 mbu. Wheat ending stocks decreased a minimal 9 mbu to total 965 mbu. 

Minimal changes were made to the world ending stocks estimates today. Corn came out at 297.8 million metric tons, soybeans were 96.7 mmt, and wheat was 288 mmt. These were changes of 1.5 mmt less wheat, 2.76 mmt less corn, and 300,000 mt more soybeans. 

Much of the attention today was on quarterly stocks where adjustments were made to the 2018 corn crop balance sheets. The 2018/19 corn carryout number was revised from 2.11 bbu to 2.22 bbu as production was lowered but so was demand. As a result, the September 1st, 2019 stocks number increased as well. Even with this increase, corn stocks as of December 1st were less than expected at 11.39 bbu compared to 11.94 bbu a year ago. Soybean inventory on December 1st was slightly above estimates at 3.25 bbu, but a large 496,000 bu less than December 1st of 2018. The US wheat inventory also came in lower than expected at 1.83 bbu compared to 2 bbu a year ago. 

Winter wheat acres are anticipated to drop to the lowest level this year since 1909. The USDA is predicting winter wheat acres at 30.8 million this year as drought impacted the crop in the Western Plains last fall. It is possible this number could rise if the crop comes out of dormancy until favorable conditions.  

The private Brazilian firm Safras Mercado revised their corn and soybean crop estimates today. Safras is nor projecting a soybean crop of 123.6 mmt which is slight under the previous 125.5 mmt projection. The firms corn estimate was also lowered but still higher than all others at 103.3 mmt. Crops have been hit by drought conditions which is why we are seeing the reductions. 

While mostly overlooked, weekly export sales numbers were also released today. Export sales for the week ending January 2nd were dismal for the market. Sales only totaled 6.37 million bu on corn, 13.06 mbu on soybeans and 2.96 mbu for wheat. These were all under trade expectations and well below the needed amount to reach yearly expectations. The reason for the low sales volume was the fact they covered the holiday breaks. 
 

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