Market Analysis

The next USDA Supply/Demand and S American crop reports will be updated on February 9. Traditionally, the Ag Department doesn't make many changes in their US and World balance sheets this month after they finalized the US crop numbers in January. In the past, the USDA's World Board has taken a wait and see approach to this month’s US demand & S. Hemisphere crops projections. However, the on-going strong US soybean exports and China’s record-setting US purchases of American corn for exports last week has many in the trade expecting both of these US balance sheets to be tightened.

After previous concerns that China might not come close to their US Phrase 1 trade agreement, their purchase of 5.86 mmt of corn or 230 million bu in one week for the cur-rent 2020/21 crop year changed this narrative. Last week’s 292 million bu of total sales even overtook the highest roll-over corn sales level ever in September 2009 of 191 million bu. With exports now at 86.6% of the US 2.55 billion bu forecast, a 250 million bu increase in this demand level is expected. With no stock report until March & US ethanol output tracking the USDA’s forecast, no changes in these usage levels are expected. However, current high prices may double corn’s imports to 50 million bu resulting in an adjusted US ending stocks of 1.327 billion bu.

After a La Nina delayed planting season & dryness that slowed crop development, recent S. American rains have stabilized prospects, except for heavy S Brazilian moisture possibly damaged 1-1.5 mmt of crop. Brazil’s harvest de-lays have advanced US exports to 96% of the current forecast, but the arrival of a190 mmt (7 billion bu output) S, Am soy crop in weeks will shift the world’s demand south of the Equator. The USDA could wait on their US balance sheet changes to see how S. America’s harvest turns out.

With the focus on Russia’s export duties, the US weekly average wheat shipments are the highest since 2012/13. This suggests maybe lower exports & a higher US stocks by 25 million to 861 million bu. (not pictured)

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What’s Ahead

China’s US corn purchases & Russia’s wheat duty announcements on their remaining 2020/21 and their initial 2021/22 export sales have advanced these crops to our sales points. Expanded rainfall across S America has tempered soybean prices over the past few weeks. Hold the remaining 20% 20/21 soybeans and new-crop corn & soybean marketing at 20% to observe Brazil’s harvest results.