Friendly corn, negative soybeans

By Doug Tenney, Leist Mercantile

Two things to watch with this report will be old corn ending stocks and old corn US exports. Brazil’s corn production is another key number to watch.

Shortly after the report was released, new corn was up 4 cents, new soybeans down 7 cents, and wheat down 3 cents. Just before the report release, new corn was up 7 cents, new soybeans were up 5 cents, and wheat was up 2 cents. 

US corn exports have been strong since last fall. Ponder this – many have been expecting USDA to raise old corn US exports since January. They have increased but at a much slower pace than expected.  The January WASDE report pegged US corn exports at 2.55 billion bushels. In May that export number was 2.775 billion bushels. Many analysts are expecting that export number to eventually reach 2.9 to 3.0 billion bushels. Since January, USDA has increased the export number three times.

Expect the Brazil corn production number to be lowered again this month.

This is not new news but continues to be a strong feature for corn. China still had 335 million bushels of unshipped US corn purchases at the end of May. For months the trade has expected China to take delivery of all or nearly all of their old crop US corn purchases. Two weeks ago, US corn exports were 80 million bushels with 40 million bushels on the way to China. On the other hand, USDA has expected at 100-200 million bushels of those purchases to be rolled to new crop delivery, and shipped after August 31. The debate continues.

Brazil’s corn production has fallen drastically in recent months due to prolonged drought conditions. In May USDA estimated the Brazil corn production at 102 million tons. Some private analysts have suggested for over a month the Brazil corn production could be as low as 90 million tons. Depending upon which weather observer you follow, the Brazil drought is the worst in 50-100 years. The Brazil drought has helped push US corn exports higher in recent months.

New crop 2021-2022 US soybean ending stocks were estimated to be 155 million bushels and new crop 2021-2022 US corn ending stocks were estimated at 1.357 billion bushels.

Corn 2020-2021 ending stocks were 1.107 billion bushels, last month was 1.257 billion bushels. Soybean 2020-2021 ending stocks were 135 million bushels, last month was 120 million bushels. Wheat 2020-2021 ending stocks were 852 million bushels, last month was 872 million bushels. .  

The average trade estimate for US old crop grains ending stocks were: Corn 1.207 billion bushels, soybeans 122 million bushels, and wheat 869 million bushels.

Brazil corn production was 98.5 million tons, last month was 102 million tons. Brazil soybean production was 137 million tons, last month was 136 million tons. 

Weather continues to be a dominant feature for grain prices. Expect that trend to continue into August. The GFS weather model is a closely watched phenomenon but the past few weeks has not been very accurate. Remember two things. 1) There is a new forecast every six hours. 2) The GFS forecast is free, anyone can get it.

Warm and dry weather is expected for much of the US cornbelt. The western cornbelt remains dry along with the northern US plains. North Dakota had numerous days the past two weeks of 90 degrees plus.

North Dakota has received at least two different weather events since Sunday. Rainfall totals on Tuesday saw general coverage of .2” to 1.25.” Some isolated totals reached 2.” While those rain events did push prices lower earlier this week, the market has not remained lower for days and days.

Grains did get a boost on Tuesday with the US Census reporting both corn and soybean exports to date were larger than the weekly reports indicated on a year to date basis. Corn exports year to date were 150 million bushels higher while soybean exports year to date were 124 million bushels higher than traders had expected.

Earlier this week on Monday, November CBOT soybeans made a new contract high of $14.80. December CBOT corn this week has rallied to $6.20 ½ following the recent low of May 26 of $5.00 ¼. It made a contract high of $6.38 on May 7.

Unless this report is bearish or a wetter weather pattern develops in Brazil, the trend looks to remain up.

Thought for the day. We are one political or economic event away from changing the grain markets in a dramatic fashion.

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