Pre-March Corn Stock Update - Covid Has Limited 1st Half Demand, But Chinese Demand Ahead

Market Analysis

The corn market’s focus will be split on March 31 between the USDA’s prospective planting and quarterly stocks reports for the major US grain crops. The first US survey-based planting intentions data normally gets the most attention that day, but the USDA’s quarterly stocks are important touchstones on how the US demand levels have performed in the first half of the crop year.

After a solid fall quarter, this past winter quarter’s US FSI (ethanol) corn demand struggled as better-quality corn, rising covid numbers reduced driving and a polar vortex (extreme cold) in the central US dropped ethanol production sharply during February. This year’s higher corn con-version rates because of corn’s higher test weights helped US biofuel plants use only 1.515 billion bu. for this industrial demand. This usage level is down 11.5% from last year.
Once the US soybean export program began to moderate after the first of the year, US corn exports have been on the rise. This past quarter’s overseas shipments of 655 million bu. are the 2nd highest level ever vs 1989/’90s 682 million level. However, this year’s US export shipments have a lofty 2.6 billion goal now & will likely rise to 2.8 billion bu. in April after China’s 3.9 mmt corn purchase last week. To achieve this potential export level, this year’s weekly shipments need to average 64 million bu. the balance of this crop year. This pace will be monitored closely, but the size of Brazil’s safrinha corn crop that has been planted late this year will be corn’s main price factor the next 8-10 weeks.

This year‘s US cattle feedlot inventories, pig crop numbers, and poultry slaughter rates suggest this past quarter’s feed-consuming numbers remain robust and near last year’s overall levels. The quality of 2020’s corn is a negative on use while the reduced efficiency of higher slaughter weights from last year’s Covid issues delaying animal marketings counter each other. This puts our corn feed usage level at 1.297 billion bu. for this past quarter. Overall, corn’s March 1 stocks could be a modest 92 million bu. lower than last year at 7.860 billion bu.

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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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