CBOT weekly outlook: WASDE unexpectedly bearish for corn

MarketsFarm — Corn prices on the Chicago Board of Trade immediately turned sour after Tuesday’s release of the monthly supply and demand report from the U.S. Department of Agriculture.

By the time trading closed for the day, soybeans had recovered from losses incurred shortly after the report’s release to finish in double-digits on the plus side.

While reductions were made to corn ending stocks for 2020-21, they weren’t cut to the extent the trade had anticipated.

“The market was expecting to see some fireworks,” said Steve Georgy, president of Allendale Inc. at McHenry, Ill.

In its world agricultural supply and demand estimates (WASDE), USDA cut 2020-21 ending stocks for corn from the 1.55 billion bushels in its January report, to 1.5 billion. The average trade guess was for 1.36 billion. However, the carryout is nearly 22 per cent less than that in 2019-20.

“Everyone was expecting bigger changes. We did not get that,” Georgy said, noting the assumption of further cuts to ending stocks came from a demand point of view.

The department reduced soybean ending stocks by a little more than 14 per cent, going from 140 million bushels to 120 million, only one million higher than the average market projection. Also, it’s a 77 per cent drop compared to the 2019-20 carryover.

USDA maintained its forecast for total wheat ending stocks at 836 million bushels, compared to the average guess of 834 million. The previous year’s carryout was 1.3 billion bushels.

The February WASDE also made some adjustments to exports, with those for corn going from 2.55 billion bushels to 2.6 billion. In 2019-20, exports were 1.78 billion bushels.

Soybean exports budged slightly, from 2.23 billion bushels to 2.25 billion, still a sharp rise from the 1.68 billion bushels exported in 2019-20.

USDA also held wheat exports at 985 million bushels. Exports in 2019-20 came to nearly 2.1 billion.

The WASDE, Georgy said, “is almost a flat report with no excitement.”

— Glen Hallick reports for MarketsFarm from Winnipeg.

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