Corn futures contracts ended the day sharply lower after Department of Agriculture officials raised 2019/2020 corn yield estimates while lowering soybean yield estimates in the World Agricultural Supply and Demand Estimates report Thursday.
USDA raised corn yield estimates to 168.4 bushels per acre from September’s estimate of 168.2. Traders were guessing 167.5 bushels per acre.
“The market obviously moved lower (and) potentially expected a bigger yield adjustment down,” John Newton, chief economist at the American Farm Bureau Federation told Agri-Pulse.
Corn ending stocks came in at 1.92 billion bushels (bb) which is down from last month’s projection of 2.19 bb. Analysts were thinking the number would drop to 1.78 billion bushels.
“Everyone was expecting corn yields to drop and most of the expectations were a bushel,” Allendale Inc. President Steve Georgy told Agri-Pulse. But USDA also reduced export sales, and Georgy said that kept the corn market bearish today.
In its Crop Production report, the department projects corn production at 13.77 bb, which is slightly lower than last month’s projection of 13.79 bb but higher than the average trade guess of 13.68 bb. Traders thought soybean production would drop to 3.58 bb, but this month's production report projects 3.55 bb.
In the WASDE, the department dropped soybean yield estimates from last month’s estimate of 47.9 bushels per acre to 46.9. The average trade guess was 47.3 bushels per acre. Soybean ending stocks are projected at 460 million bushels. The department’s projection is down from last month’s projection of 640 million of soybeans and 913 million bushels last year.
“That’s getting tighter,” Georgy said about soybean ending stocks. “Just several months ago we were sitting a billion carryout ... that is a friendly number for beans.”
Newton said it is good news on the China front. "We saw big export sales on soybeans as well as pork,” Newton said. “That was one of the big take-aways when you look at USDA’s soybean balance sheet for 19/20.” He also noted the ending stocks number was also driven by a sharp reduction of acreage in 2019 compared to 2018.
USDA officials are estimating U.S. wheat ending stocks for the 2019/2020 marketing year to be at 1.04 billion bushels, but traders anticipated 1.01 billion bushels. Last month’s WASDE projection totaled 1.01 billion bushels for wheat.
“That is still big,” Georgy said. However, he noted weekly demand numbers are looking alright. “We have been seeing more demand, exports have been, I don’t want to say good, but they’re OK.”
The next two days, traders will turn their attention to China talks and then see how the major winter storm moving through the upper Midwest impacts crops.
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