USDA Report Neutral

By Doug Tenney, Leist Mercantile

What a difference a year makes! This year, corn has seen excellent corn planting progress in major production states compared to last year. Ohio and Indiana are exceptions as they were planted later than the western cornbelt states.

Ahead of the report, many had expected it to be bearish with USDA reducing corn for ethanol, corn exports, and soybean exports.

For today, don’t expect the same kind of same kind of USDA report and price action seen with the June 11, 2019 report date. The June 2019 report reduced corn acres by 3 million. In addition, yield was cut 10 bushels per acre. December 2019 CBOT corn was up 12 cents that day. The early June 2019 corn planting progress was near record slow.

Last month USDA had much smaller demand changes for old corn than many had expected. At that time they tipped their hand that reports into August on old crop corn and old crop soybean demand changes would be hand to mouth, one month at a time.

Shortly after the USDA report was released, corn was up 2 cents, soybeans up 2 cents, and wheat down 5 cents. Just before the noon report, grains were mixed with corn and soybeans up 1 cent and wheat was down 2 cents. 

Old corn exports were unchanged at 1.775 billion bushels, while corn for ethanol was cut 50 million bushels.  Old crop soybean exports were cut 25 million bushels, while crush was up 15 million bushels. .

Old crop ending stocks were expected to increase for both corn and soybeans. Old crop corn ending stocks were 2.103 billion bushels, last month was 2.098 billion bushels. Old crop soybean ending stocks were 585 million bushels, last month was 580 million bushels. Wheat ending stocks for old crop were 983 million bushels, last month 978 million bushels.

New crop corn ending stocks were 3.323 billion bushels, last month was 3.318 billion bushels. New soybean ending stocks were 395 million bushels, last month was 405 million bushels. Wheat new crop ending stocks were 925 million bushels, last month was 909 million bushels.

A cautious economic tone from the US Fed yesterday at the conclusion of their 2 day meeting is producing big changes today. US Fed Chairman Powell indicated there could be long term harm to the US economy as they feared a second wave of the Coronavirus. Crude oil was $3 lower this morning while the DOW is down over 1100 points.

Weather will be a huge factor for the next 3 weeks into the July 4th holiday. Current weather forecasts suggest warm and dry into June 20. Previous forecasts were warm and dry into June 19, implying minor changes this week. Expect volatile price activity for corn and soybeans as weather forecasts likely changes multiple times by early July. There continues to be lots of unpriced old crop corn still in the bin which serves as huge overhead price resistance. Multiple dimes higher for corn in the next month will require both weather and demand surprises.

China and their purchase of US soybeans will also be a huge unknown. This morning’s US weekly export sales report had purchases by China of 512,000 tons as well as unknown destinations for new crop soybeans which totaled 1.2 million tons.  If those sales had been for old crop it likely would have pushed soybeans higher before the report.

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