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.

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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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