USDA’s World Agricultural Supply and Demand Estimates (WASDE) report fell in line with trade expectations when it lowered corn ending stocks as producers struggle with a challenging harvest.
In a report released Friday, USDA projects 2019/2020 corn ending stocks at 1.91 billion bushels. This number is marginally lower than October’s projection of 1.92 billion bushels. The average trade guess for ending stocks was 1.8 billion bushels.
Allendale Inc. President Steve Georgy said the numbers fell largely in line with industry expectations.
“The thing is, we sold corn off going into the report because everyone was expecting to see a bearish number including myself,” Georgy said.
USDA pegged corn acres to be harvested at 81.3 million acres, a figure unchanged form last month's report and also in line with trade expectations. Traders were also estimating a 167.2 bushels per acre corn yield; USDA's official figure came in at 167 bpa, 1.4 bushels lower than last month's report.
Georgy said soybean prices were trading lower not necessarily because USDA ending stocks were raised but because of comments from President Trump saying he did not agree to roll back tariffs with China.
“Even before this report was released, you kind of had this negative movement that we way may have over done it,” Georgy said. He thinks that may have more of an impact than ending stock numbers.
USDA raised soybean ending stocks to 475 million bushels, a 15 million bushel hike from the October report.
USDA’s soybean harvest projection of 75.6 million acres from last month was unchanged; analysts' average guess was 75.5 million. USDA's yield projection was unchanged at 46.9 bushels per acre, a figure slightly higher than the trade estimate of 46.6.
Wheat stocks are continuing to shrink, but Georgy said one billion bushels of wheat is still too much.
Department officials are estimating U.S. wheat ending stocks for the 2019/2020 marketing year to be at 1.01 billion bushels, but traders anticipated the department the number to be 1.03 billion bushels. Last month’s WASDE projection totaled 1.04 billion bushels. The 2018/2019 crop was pegged at 1.08 billion bushels.
“We need to become the cheapest wheat around the globe,” to get rid of the supply, he said.
USDA’s National Agricultural Statistics Service also released the Crop Production report. U.S. corn production is projected at 13.7 billion bushels which is marginally lower than last month’s projected 13.8 billion bushels. Soybean production is forecast at 3.55 billion bushels which is unchanged from last month’s report.
Georgy said now that the markets have digested the WASDE report — which was briefly delayed due to USDA website maintenance — traders will be turning their attention to watch how the weather impacts harvest at home, planting in South America and the ongoing U.S.-China trade negotiations.
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