Pre-December USDA Report - Smaller US Corn & Bean Crops & Strong Export Demand Tighten Stocks

Market Analysis

With 2020/21’s US corn & bean exports sharply ahead of last year’s paces, talk has been murmuring about both crop’s exports being increased on the upcoming US supply/demand report. However, the USDA has’t made many export changes in their December balance sheets over the past five years despite oversea demand being ahead or behind expectations. With no US row crop updates on Dec 10, the World Board has decided in the past to limit its de-mand changes until January’s final crop levels are known. Given the current La Nina weather pattern impacting S. America’s corn & soybean crops in Argentina and Brazil, the USDA’s foreign crop updates will be important, too.
2020 export sales are 450 million bu ahead of corn’s seasonal pace to hit the USDA’s current 2.65 billion bu fore-cast. This year’s 1.2 billion in sales are 57% of our record foreign demand & the highest for late Nov since the 2012/13’s 64%. However, the biggest US unknown is shipments. The US needs to average 56 million bu./week over the final 9 months of US export season. Even with Novem-ber ethanol on pace for the best output since Feb 2020, no change in biofuel demand is likely with Covid infections on the rise. Overall, corn’s Dec ending stocks have changed 50 million bu. twice in the last 5 years (exports down in 2018 & ethanol demand up in 2017). This suggests the USDA will leave US corn stocks unchanged to watch S AM crops and January’s final US crop level.
This week’s record October US soybean crush of 196.6 million bu has this demand off to a great start, which could prompt a 10-20 million bump. However, the USDA’s outlook is already a record 2.18 billion bu. so no change is possible. Exports are 87% of 2020s 2.2 billion USDA fore-cast. Beans have had two 25 million demand changes in Dec usage in the last 5 years – both export cuts. The USDA might wait on either more China buys or status of S. Am weather until January before stock change, too.
Similar to corn & beans, wheat’s the US ending stocks could remain unchanged since US exports appear to be on target

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Disclaimer: The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of any futures brokerage firm or its ...

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