Bullish report with corn and soybeans higher

By Doug Tenney, Leist Mercantile

U.S. numbers highlights: U.S. corn exports down 125 million bushels; corn for ethanol unchanged; U.S. corn ending stocks down 17 million bushels; U.S. soybean exports down 55 million bushels; US soybean ending stocks down 10 million bushels.

World numbers highlights: Brazil soybean production 153 million tons, up 1 million tons. Argentina soybean production 45.5 million tons, down 4 million tons.

Expect price changes for the grains to be immediate with lots of fireworks in the first 20 minutes after the reports are released.

Here’s your tidbit for the day. The January USDA report day has been bullish for grains with gains for the day taking place 70% of the time since 2007. Also, just a reminder that USDA in recent months has tended to punt, leaving many of the demand numbers unchanged when traders were expecting increases or decreases. At times it results in confusion, with the bubble above your head reading, “What were they thinking?”   

This report month is typically in the top 3 in importance of USDA reports for the entire year. Along with the normal monthly WASDE Report, USDA will also detail U.S. quarterly grain stocks as of Dec. 1, and U.S. winter wheat acres. 

Following the noon report release, corn was up 12 cents, soybeans up 23 cents, and wheat down 4 cents. Prior to the report, corn was down 5 cents, soybeans up 6 cents, and wheat down 14 cents. 

Traders were expecting the 2022 U.S. corn and soybean yields to increase. Here’s why. Historically the January WASDE Report has a good chance of corn and soybeans yields increasing when the previous November WASDE Report has yield increases compared to October. Those yield increases did indeed take place in November 2022.

U.S. corn production was 13.703 billion bushels with a yield of 173.3. U.S. soybean production was 4.276 billion bushels with a yield of 49.5. Last month, U.S. corn production was 13.930 billion bushels with a yield of 172.3. Last month, U.S. soybean production was 4.346 billion bushels with a yield of 50.2 bushels. 

U.S. 2022-2023 ending stocks: corn 1.242 billion bushels, last month 1.257 billion bushels; soybeans 210  million bushels, last month 220 million bushels; and wheat 567 million bushels, last month 571 million bushels. 

Trader estimates for 2022-2023 US ending stocks were corn 1.314 billion bushels; soybeans 236 million bushels; and wheat 580 million bushels. 

USDA today projected China would be importing 96 million tons of soybeans during the current marketing year from September to August. Last month was 98 million tons. 

US corn exports were each expected to be reduced 50-75 million bushels with ending stocks to increase. Corn for ethanol was expected to be cut 25-50 million bushels. In addition, US soybean exports were expected to be cut 20-30 million bushels.

The weekly US Grain Sales Report earlier today detailed corn sales of 10.0 million bushels, soybean sales were 26.3 million bushels and wheat sales of just 3.3 million bushels.  Weak demand for US wheat resulted in soft red wheat making new 15 month lows earlier this week.

Look for Argentina weather will dominate the news for at least another two weeks. Rains moved across Ohio that were heavy at times. More rain is expected this afternoon.

Recent rains in eastern U.S. have increased water levels on the Mississippi River. Barge freight is down drastically from the highs of September and October. 

Look for grain movement in January to be higher than expected with the lack of cold, frigid weather currently and into the next 10 days. Hope those grain bins off the beaten path have a good gravel base!