Wednesday May 13, 2020

• Trade reacting to reality check provided by the USDA in yesterdays report

Corn:

• Overall: A record (see below) projected corn crop is off to a close to ideal start for 2020 with the weather mostly cooperating 
• Old crop, 2019/20 carryout numbers came in lower than trade expected and only slightly higher than Aprils projection 
  • There was a decrease in corn used for ethanol, and more are to be expected, however an increase was made in feed usage as well as exports to help counter the blow
• First look at new crop projections 2020/21, used the 97.0 million acres and trend line yields of 178.5 bu/ac to give record production at 16 billion bu
  • Carryout was high at about 3.3 billion bu but not higher than expected, increases in feed usage number, exports and a recovery of ethanol industry assumed for 2020/21 demand
    • Overall this report certainly doesn’t leave much room for optimism that the corn price is going to sky-rocket but does add support at the bottom of prices that things maybe aren’t quite as bad as we had feared

Soybeans:

• Old crop, 2019/20 bean carryout numbers surprised the industry coming in a full 100 million bu higher than last estimate and higher than all expectations
  • The only notable change that impacted this large increase is a reduction of 100 million bu from export estimates. Overall it is not a surprise the exports were lowered and it is justified based on export pace but was a little surprising it was done all at once
• New crop initial production 2020/21 came in slightly lower than estimates using the 83.5 million acres reported in March 
  • Still a respectable carryout but if these smaller acres materialize it leaves the bean market a little more susceptible to concern if weather scares arrive through the growing season 
    • Overall; a needed reminder that demand is still slow for old crop, but leaves slightly more room for optimism on new crop if some sort of production threat materializes 

Wheat:

• Old crop carryout came in a little higher than expected 
  • An increase in wheat used for human consumption was not enough to offset the losses of wheat export sales 
• New crop wheat 2020/21 carry outs were also higher than expected
  • Slightly lower production predicted but expecting to see a loss in export and feed demand however leaving us with a carryout smaller than this years but over the average estimates heading into the report 
    • Overall; with the current picture it projects wheat price