Neutral report as USDA punts again

By Doug Tenney, Leist Mercantile

Report highlights: USDA punts…again!! No changes in corn and soybean, crush or exports.

Trade expectations: U.S. soybean exports or crush to decline while U.S. soybean ending stocks for 2023/24 increase. Lower corn and soybean production numbers for Brazil and Argentina were also anticipated.

Following the noon USDA report release, corn up 1 cent, soybeans down 4 cents, and wheat  down 12 cents. Just before the report was released, corn up 2 cents, soybeans down 1 cent, and wheat down 10 cents.

US 2023/24 ending stocks: corn 2022  billion bushels, last month 2.022 billion bushels; soybeans  350 million bushels, last month 340 million bushels; and wheat 688 million bushels, last month 688 million bushels.

Trader estimates for 2023/24 ending stocks were: corn 2.009 billion bushels, soybeans 346 million bushels, and wheat 688 million bushels.

US 2024/25 ending stocks: corn 2.102 billion bushels, last month 2.102; soybeans 455 million bushels, last month 445 million bushels; and wheat 758 million bushels, last month 766 million bushels.  

Trader estimates for 2024/25 ending stocks were: corn 2.079 billion bushels, soybeans 448  million bushels, and wheat 778 million bushels

USDA this month estimates Brazil soybean production at 153 million tons, last month was 154 million tons. Brazil corn production was estimated at 122 million tons, last month was 122 million tons. Argentina soybean production was 50 million tons, last month was 50 million tons.

Argentina corn production was estimated at 53 million tons, last month was 53 million tons.

This morning USDA announced a sale of U.S. old crop soybeans to 106,000 tons to China. U.S. sales of soybeans to China have been limited in 2024. Last week, Brazil proposed a tax increase of 20% which has yet to be approved by their Congress. Brazil producers quickly responded with their hands in their pockets, refusing to sell when they knew they were potentially subject to  realizing 20% less money if they sold soybeans. Reports this morning indicated that their Congress was not thrilled with that proposal. Soybeans last week rallied quickly on June 6, closing 16-22 cents higher with that news. But, the very next day soybeans were down 9-20 cents.

Keep in mind that the headline traders could easily view a neutral report as bearish. Why? Because neutral is not bullish.

U.S. producers were active sellers of wheat in May. The July 2024 CBOT rallied to $7.20 on May 28, up significantly from its May low on May 1 of $5.93 ½. Since that high late May, July wheat has quickly retreated this week to $6.06. In addition, July 2025 wheat in that same rally reached $7.55. The wheat rally took place on news of Russia’s frost and freezes taking place in May. This price action is the classic example of the old timer’s adage, “buy the rumor, sell the fact.”

The markets have changed dramatically in recent years. It has been difficult for weeks long rallies on weather or demand news to take place with any kind of frequency. Instead, the rallies lately have often consisted of only a few days which are often followed by weeks of price declines.

Traders continue to compare Brazil corn and soybean production with the CONAB estimates from within Brazil to those of USDA. USDA is slow to change numbers dramatically as their decades old mantra of, “getting the direction pegged correctly” is still the theme they adhere to.

Weather will quickly return to the top step of news to follow. Just remember each day can see three weather forecasts released. Life comes at you fast. Next week, Ohio will experience at least six days of 90 degrees for daily highs. Early next week those daily highs could reach the mid-90’s.

Expect weather to be a significant factor well into late July. Its affects can be profound.

Check Also

Soybean defoliation: How much is too much?

By  Stephanie Karhoff As you scout soybean fields this August, you will likely come across …

Leave a Reply

Your email address will not be published. Required fields are marked *