Pre-January US Supply & Demand - Smaller US Soybean & Corn Crops And Export Demand Tighten Stocks

Market Analysis

2020 has been quite a year! After lengthy talks, many wondering if the US-China Phrase 1 trade deal would even be signed. By spring, China’s prospects of buying 50% of their US ag imports were dim. The coronavirus epic spread across the world hurt most economies and changed many people’s livelihoods & eating habits. By summer, N. Hemisphere’s weather altered many crop prospects from the Black Sea, to Europe, to the US and finally to China as drought, wind & typhoons hurt 2020/21’s world crop output.

Entering 2021, China is now the world’s largest grain & oilseed importer while S. America’s dryness is prompting price rationing over supply concerns. The USDA’s January 12 World & US Supply/Demand revisions are the next updates on supplies and stocks.

US soybeans (SOYB) will be the market’s main focus as traders are expecting smaller US ending stocks & a lower S. American crop next week. A 35 million bu lower crop (-0.4 bu yld) is expected with the final US crop smaller vs Nov four out of the last 5 years. With export sales at 91.6% of the USDA outlook & S AM dryness likely dropping their crops, a 30 million jump in exports is expected. These changes along with 25 million cut in beans residual demand will drop the US ending stocks to 130 million bu; the tightest stock/ use level of 2.9% since the 2013/4 crop year.

A slightly smaller final US corn (CORN) crop of 14.425 bil bu is expected, off 82 million from November. Late season dryness & January’s yield being lower 5 of the last 7 years are behind our 1 bu smaller US yield. Argentine dryness has some expecting a jump corn exports, but the current mountain of 2.06 billion (59 million/week) in remaining shipments may prompt the USDA to leave its foreign demand at 2.65 billion bu. Given a possible 15 million rise in imports and 60 -75 million lower feed demand because of reduced feed purchases ahead of harvest, only a modest monthly stock change to 1.695 billion bu may occur.

With no changes in wheat’s final US crop and domestic & foreign demands, its US stocks could remain unchanged.

What’s Ahead 

The upcoming January US & world crop updates & the USDA’s supply/demand revisions are always a major market events. However, S. America’s weather conditions & their impact on crop sizes will remain market factors into January.

Given the volatility of S. American weather & rainfall producers should have 80% of your old-crop corn & soybeans marketed & 20-25% of your new-crop priced at this time.