May US/World Crop & S/DUpdates

Some USDA surprises, Soybeans & Wheat Stocks lower in 2020/21 

Market Analysis

The USDA’s supply/demand updates had some surprises in both their current & 2020/21 corn and soybean supply/ demand updates when they issued their May balance sheet updates. Two things that followed tradition were the USDA utilizing their Ag Forum yield levels and recent March planting intentions to project the general sizes of these two major US 2020/21 crops.

Given the dramatic cutback in US ethanol output and the US livestock slaughter rates from the impact of Covid-19 on the US economy, this month’s virtually unchanged oldcrop corn stocks was a surprise. A 29 million smaller crop from reduce northern states crops, a 25 million increase in feed demand & a 50 million jump in exports compensated for a 100 million bu. cut in ethanol demand. The USDA shuffled their new-crop demand levels, but their overall 2020/21 demand outlook was similar to their Ag Forum forecast. This produced a hefty 3.3 billion bu. new-crop ending stocks, the highest in 33 years. However, it wasn’t a 4 billion level as some trade sources feared.

In soybeans, the USDA’s surprise was 100 million bu drop in old-crop exports, This occurred despite DC’s 1 mmt cut in Argentina’s crop and Brazil’s CONAB slicing 2 mmt from their estimate to 122 mmt. However, the sluggish rate of US exports below to their seasonal pace to achieve their current forecast was worrisome. No increase in the US crush was a surprise with reduced DDGs likely pulling more meal into US hog & poultry rations. This higher carryover upped 2020/21 supplies, but the USDA kept its strong demand outlook so US ending stocks remained modest. DC’s slightly lower outlook at 98 mmt for the world 2021 ending stock was supportive. 

This month’s 1st US winter wheat crop was slightly higher than trade ideas when the USDA saw a larger soft red crop. However, slightly less hard red & white bushels along with a modest US spring wheat outlook left 2020’s total supplies near estimates. Building world stocks prompted a drop in US 2020/21 exports.

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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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