Corn, soybean and wheat markets advanced on Tuesday after USDA increased exports and domestic use, which partially offset the increases it made this year’s crop estimates.
The corn crop was raised by 100 million to 14.554 billion bushels, soybeans increased 80 million to 3.88 billion and wheat increased by 184 million to 2.26 billion. Much of those changes were due to the acreage numbers in the June 30 planting report.
As expected, USDA lowered Brazil’s corn crop to 70 million metric tons from the previous 77.5 million. A reduction had been expected as Brazilian sources had said excess rain during the growing season hurt the crop. USDA on Tuesday said Brazil’s smaller crop should increase foreign demand for U.S. corn.
“The biggest number from today’s report may be USDA’s estimate of Brazil’s corn crop,” said Bryce Knorr, Farm Futures senior grain analyst. “The agency slashed its projection even more than I expected based on figures put out last week by the Brazilian government, reducing the crop by 295 million bushels. That’s enough to give a shot in the arm to U.S. exports of both old and new crop corn, reducing the impact of lower feed and ethanol usage.“
U.S. soybean ending stocks of 290 million were up from June’s 260 million. The latest number topped the average trade forecast by a small margin, although Farm Futures expected 330 million. USDA did increase exports by 20 million and the crush by 10 million from June.
“Soybeans should benefit from stronger demand, but again, production could be bigger than USDA forecasts too,” said Knorr. “The agency stuck to its statistical trend yield as expected, which is below our current yield forecast based on crop ratings. Weather is the key driver of prices now, so growers should be carefully planning sales if they didn’t get enough sold on the earlier rally. All it may take is a shift in the forecast to send prices lower.”
USDA raised wheat production to 2.26 billion, which topped most trade forecasts. The increase was based on an expected record winter wheat yield and above-average spring wheat yields
“USDA’s winter wheat estimate was a real gut-blow to that market, with several states, including Missouri and Kansas, showing huge gains in yields,” said Knorr. “The agency could also be too low on its spring wheat estimate, adding to the burdensome supply. The agency’s forecast for 2016-2017 ending stocks wasn’t as bearish as some in the trade feared, but it’s still not friendly, making it all the more difficult to rally.”
The markets moved higher after the numbers with December corn up 4-1/2 cents in midday trading, November soybeans up 27-1/2 cents and September soft red winter wheat up 6.
In other countries, USDA lowered Brazil’s soybean crop to 96.50 million metric tons from 97 million and left Argentina’s unchanged at 56.5 million.
Global corn ending stocks for 2016/2017 increased by 3.3 million to 208.4 million metric tons, as larger supplies in China, the U.S. and Indonesia offset smaller amounts in Brazil, Japan and Canada.
Global soybean ending stocks for 2016/2017 went to 67.1 million metric tons from June’s 66.31 million.