Chicago Close: Soybeans and Wheat Lower, Corn Up Post USDA

Corn posted modest gains on Friday following the USDA’s monthly supply-demand update. Soybeans and wheat ended the day lower.

December corn futures rallied 10 cents in the minutes following the report’s release as ending stocks were projected lower, although perhaps not as low as the trade expected as within a couple of hours prices retreated to the day’s open. Despite a significant estimated yield reduction of 1.4bu/acre, decreased demand in all categories offset the drop to provide a final ending stock reduction of only 18 million bu vs. an average pre-report trade estimate of 173 million. In addition to the report, the USDA announced a private export sale of 217,040MT help the commodity finish strong with December gaining 2 cents to $3.77 ¼ and new crop December gaining 1 ½ cents to $4.01 ½.

Soybeans were down the hardest today, with January slipping 5 ½ cents to $9.31 and new crop November falling 5 cents to $9.67 ¼. This was the result of unmet expectations from the trade as drops that were anticipated in production, yield and harvested area were not realized. In contrast, the USDA left most figures virtually unchanged except for crush demand, which they reduced by 15 million bu. This had the effect of increasing ending stocks by 15 million bu to 475 million while the average pre-report trade estimate was a tightening of 18 million bu to 419 million. A private export sale of 270,000 MT was announced this morning but was unable to reverse the negative sentiment in the market.

Wheat ended the day lower with December futures falling 2 ¼ cents to $5.10 ¼ and new crop December slipping 1 cent to $5.43 ½. The U.S saw a reduction in ending stocks following the resurvey of states affected by a dismal 2019 harvest, resulting in a downward revision of harvested acres. In contrast, global stocks ended up seeing a slight bump with above average production out of the EU, Russia and the Ukraine more than off-setting poor performances out of Australia and Argentina. While neither estimate was dramatically off the pre-report trade guesses the world stocks came as more of a surprise, putting downward pressure on futures.  

Source: DePutter Publishing Ltd.

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