The Department of Agriculture slightly raised 2020/21 beginning and ending corn stocks in the World Agricultural Supply and Demand Estimates (WASDE) report released Thursday, but traders showed little reaction.
USDA officials raised 2020/21 beginning stock estimates for corn from last month’s 2.09 billion bushels to 2.1 billion bushels. Ending stocks were raised from May’s 3.31 billion bushels to 3.32 billion for June. USDA's 3.32 billion June ending stocks number was under trade's expectation of 3.36 billion. However, stocks were offset by a 50 million reduction in corn used for ethanol.
Mike Pearson, vice president of market engagement at Zaner Ag Hedge, told Agri-Pulse traders expected the corn used for ethanol number to be lower.
“That is not a shocking number and it's definitely in the realm of what the trade was thinking would be realistic and that is what we got,” he said.
According to the report, corn used for ethanol was lowered reflecting a slower-than-expected rebound in ethanol production. Pearson said corn used for ethanol will be something to watch in future reports if coronavirus lowers fuel demand through the summer.
Soybean 2020/21 ending stocks were lowered to 395 million bushels compared to last month’s estimate of 405 million bushels. Beginning stocks were raised 5 million bushels with higher crush for 2019/20. But that number was offset with lower production and a lower export forecast.
“The export decrease wasn’t nearly as severe as we had anticipated. My guess is USDA looked at recent Chinese purchases ... and said, ‘hey it looks like China might be able to continue this pace,'’’ Pearson said.
Allendale broker Nathan Cardwell did not see any big changes for soybeans either but said a bright spot was the increase of 150 million bushels in crush demand. USDA raised 2020/21 crush projections from 2.13 billion in May to 2.145 billion for June.
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Wheat ending stocks for 2020/21 increased from 909 million bushel in May to 925 million this month. Pearson thinks the market will shake the 16-million-bushel increase and focus on harvest.
He said right now, yield reports are coming in as anticipated, but traders will watch to see if that continues as combines start to work their way north.
“The panhandle of Texas, Oklahoma, and Kansas were hit by a frost on Easter weekend and we don’t know what that wheat is going to yield,” Pearson said. On the opposite side, the eastern U.S. has been wet, and producers in the northern plains could not get their winter wheat crop in.
American Farm Bureau Federation Economist John Newton told Agri-Pulse it is also important to note the global wheat supplies will be at record large numbers. Officials increased 2020/21 world wheat supplies 5.7 million metric tons due to a 4.9 million metric ton increase in production and higher beginning stocks.
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