The U.S. corn supply is shrinking, while the soybean stocks remain the same, according to USDA Friday.

As a result, the CME Group’s corn market jumped 10¢, following the report, reaching eight-year highs. Meanwhile, the soybean market reacted negatively to the report, and wheat prices traded double-digits higher.

At the close, the May corn futures closed 2 1/2¢ lower at $5.77 1/2, reaching as high as the eight-year peak of $5.85.

July corn futures finished 3/4¢ higher at $5.62 1/4. New crop December corn futures closed 1 3/4¢ higher at $4.96 1/4.
 
May soybean futures closed 12 1/4¢ lower at $14.03. July soybean futures finished 11 1/2¢ lower at $13.98 1/4. New crop November soybean futures closed 10¢ lower at $12.63 1/2.

May wheat futures ended 10¢ higher at $6.38 3/4. 

May soymeal futures settled $5.60 short term lower at $401.20.

July soy oil futures closed -0.53 lower at 52.85¢ per pound.

In the outside markets, the NYMEX crude oil market is -0.25 lower (-0.42%) at $59.35. The U.S. dollar is higher, and the Dow Jones Industrials are 146 points higher (+0.44%) at 33,649 points.

2020/2021 U.S. ENDING STOCKS

For corn, the USDA pegged the U.S. old-crop ending stocks at 1.35 billion bushels vs. the trade estimate of 1.39 billion bushels and the USDA’s March estimate of 1.50 billion.

For soybeans, the U.S. ending stocks were 120 million bushels vs. the March estimate of 120 million bushels. The trade expected the USDA to print 119 million bushels today.

In its report, the USDA pegged the U.S. wheat ending stocks at 852 million bushels vs. the trade’s expectation of 847 million and the USDA’s previous estimate of 836 million.

2020/2021 WORLD ENDING STOCKS

On Friday, the USDA pegged the world’s corn ending stocks at 283.9 million metric tons (mmt.) vs. the trade’s expectation of 284.5 mmt. and the USDA’s March estimate of 287.6 mmt.

For soybeans, the world ending stocks are estimated at 86.9 mmt. vs. the trade’s expectation of 83.52 mmt. and the USDA’s December estimate of 83.74 mmt.

For wheat, the USDA pegged world ending stocks at 295.5 mmt. vs. the trade’s expectation of 301.3 mmt. and the USDA’s previous estimate of 301.1 mmt.

2020/2021 WORLD CROP PRODUCTION

On Friday, the USDA pegged the 2019/2020 Brazilian soybean production at 136.0 mmt vs. the trade’s expectation of 134.0 mmt and the USDA’s estimate last month of 134.0 mmt.

For corn, Brazil’s output is seen at 109.0 mmt. vs. the trade’s expectation of 108.6 mmt. and the USDA’s March estimate of 109.0 mmt.

For Argentina’s soybean output, the USDA pegged its crop at 47.5 mmt. vs. the trade’s expectation of 46.6 mmt and the USDA’s March estimate of 47.5 mmt.

Argentina’s 2019/2020 corn crop is pegged at 47.0 mmt vs. the USDA’s previous estimate of 47.5 mmt. and the trade’s expectation of 46.6 mmt.

Trade Response

Al Kluis, Kluis Advisors, says that the report’s data is not that surprising.

“There are no game changers,” Kluis stated to customers in a webinar Friday.

Sal Gilbertie, Teucrium Trading, agrees that the USDA decided to go neutral this month.

“The USDA did its best to preserve the 120-million-bushel soybean carryout number, which is no surprise, and its corn numbers appear reasonable. This is a neutral report which may bring out some short-term selling related to profit taking, but the overall solid supply and demand fundamental situation in grains has not changed. Farmers who’ve not yet sold their crops will likely continue to enjoy the benefits of elevated price levels in grains until a better picture of South American harvests and the U.S. planting season emerges,” Gilbertie says.

Peter J. Meyer, S&P Global Platts, head of grain and oilseed analytics, says that there is not much in the way of surprises for the April WASDE. 

“Feed & Residual and Ethanol use was raised by a combined 75 million bushels based on the Quarterly Stocks report being lower than expected, while exports were up 75 million. That is probably a tad low in our opinion, as we estimate exports at 2.7B bushels currently. The 1.35-billion-bushel carryout was in line with many of the surveys. No change in soybeans, as there’s very little room there with a 120-million-bushel carryout. Brazilian production was upped 2 mmt. to 136 mmt., possibly surprising a few in the market. Given late rains in major growing regions, Platts Analytics remains at 133M MT for Brazil,” Meyer says.

Britt O’Connell, cash adviser for ever.ag, says today’s WASDE report shows a shuffling of the deck on soybean demand leaving endings stocks at 120 million bushels.

“The corn balance sheet gets a little more interesting as revisions were made 50 million higher in feed and residual, 25 million in ethanol, and 75 million in exports, leaving ending stocks at 1.352 million bushels. For some time now, the trade has been expecting the USDA to revise exports 200 million bushels higher. Today, the USDA threw them a bone. A slight revision higher in ethanol feels appropriate and even a bit forward thinking as a few plants begin to ramp up production. You could make the case for a small revision higher there again... if they can get the bushels bought.” 

O’Connell added, “All eyes now cast on the May WASDE, one that not only gives us another blush at 2020/2021, but the all anticipated 2021/2022 first glance. Tighter ending stocks mean smaller beginning stocks for the coming year. Will the USDA come in next month and add more bushels to exports should their conviction grow that they will leave the country? Fireworks would transpire for sure.”  

Jason Roose, U.S. Commodities, says that investors continue to add premium to the corn prices, after today's USDA report. 

“Corn ending stocks were reduced to 1.352 bln bushels with an increase of all three demand categories: exports, feed and ethanol. The soybean numbers were considered neutral-to-negative with ending stocks at 120.0 mln, unchanged from last month. Soybean exports were increased by 30.0 mln, but crush was lowered 10 mln, the world soybean ending stocks were increased by 2.0 mln. With a larger Brazilian bean crop, which could lead to competition if our prices stay high, planting progress in the U.S. and Brazil's second crop corn and weekly exports will be the driving forces, if the market can maintain a price premium going into spring," Roose says. 

Nick Tsiolis, Founder of Farmer's Keeper, says that with demand up and stocks down, corn has continued to cement itself as the main driver. 

"It's feeding the bull market, but not as aggressively as this week's earlier move would've suggested. Price action anticipated a tighter number than what we got," Tsiolis says.  

Tsiolis added, "If we close above $5 today on the Dec. contract, we could be looking at opening another leg higher. Focus will turn to Brazilian weather to see how its second crop finishes. Some notable bright spots in eEthanol and feed-wheat to China signaling broader demand beyond corn."