Soybean and corn futures rally following USDA’s first WASDE report of 2021

(Kara Oosterhuis/RealAgriculture)

With prices at multi-year highs, all eyes in the grain market were on the United States Department of Agriculture’s (USDA) first report of the calendar year on Tuesday. And the reaction to the report did not disappoint.

The futures market responded bullishly to the January World Agricultural Supply and Demand Estimates (WASDE), with old crop soybean futures rising by around 50 cents a bushel and corn futures up around 25 cents.

On the corn front, ending stocks came in slightly below trade expectations at 1.552 billion bushels. Global corn stocks, at 283.8 million tons, are projected down 5.1 million. Corn production is estimated at 14.182 billion bushels — down 324 million on an almost 4 bushel/acre (!) yield decrease and a slight reduction in harvested area.

“Losing about 10 bu/ac on a crop like corn (since summer) really is something,” Jon Driedger of LeftField Commodities Research noted on Tuesday’s RealAg LIVE! broadcast. “I think there’s an element to USDA making demand numbers fit their smaller production figure. The other thing on the corn exports I do have sitting in the back of my mind, and not that I expect this to necessarily happen, but it could, is big commitments to China — do they take all the corn, do we get some cancellations, does some of it maybe get punted down the road? Those sorts of things. Always with China those things are sort of a risk.”

For soybeans, ending stocks are projected at 140 million bushels, down 35 million from the previous forecast. Production is estimated at 4.135 billion bushels, down 35 million led by reductions for Minnesota, Iowa, and Kansas. The soybean crush forecast is raised 5 million bushels to 2.2 billion — a direct reflection of improved prospects for soybean meal exports with a lower export forecast for Argentina. The soybean export forecast is raised by 30 million to a record of 2.23 billion bushels.

It’s unclear why, but soybean futures curiously moved 30 cents just minutes before the report was released. Driedger says this could be due to a bit of a momentum coming in, while conspiracy theorists might say that some numbers got leaked prior to the release, but it is most likely other factors gaining momentum.

“The U.S. dollar was up, and rolled a little bit. Crude oil was up. So it could be a couple of those things as well, positioning ahead of the report. Or it could just be the fact that maybe there was just a bit of momentum coming of those numbers being released. The markets have been high and strong, and you’re going to have some sizeable swings and prices for sometimes what seemingly isn’t an explainable reason on any given day,” Driedger notes.

Wheat ending stocks came in lower than trade expectations. Projected 2020/21 ending stocks are reduced 26 million bushels, to 836 million — down 16 per cent from last year. Feed and residual use is raised 25 million bushels to 125 million on lower than expected second-quarter stocks. Seed use is up 1 million bushels to 63 million, reflecting 2020/21 wheat planted area.

For Canadian wheat, exports are raised 500,000 tons — up to 26.5 million on a strong early export pace. The expectation of large shipments to China continues as its imports are raised to 9.0 million. Projected 2020/21 world ending stocks are lowered 3.3 million tonnes to 313.2 million, but remain record high with China and India holding 51 and 10 per cent of the total, respectively.


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