U.S. grains: Corn up despite USDA forecast for ballooning stocks

Soybeans drift lower; wheat weaker on improving crop weather

CBOT July 2020 corn with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Chicago corn ended higher on Tuesday after the U.S. Department of Agriculture forecast U.S. corn stockpiles would top 3.3 billion bushels by the end of the 2020-21 marketing year, a 33-year high that nonetheless fell below an average of trade expectations.

USDA’s forecast for 2019-20 corn ending stocks, at 2.098 billion bushels, was at the low end of trade expectations.

Soybean futures ended lower, despite fresh U.S. soy sales to China, and wheat also declined.

Chicago Board of Trade July corn futures settled up 3-3/4 cents at $3.22-1/4 a bushel (all figures US$). CBOT July soybeans ended down three cents at $8.52 a bushel, and July wheat settled down 2-3/4 cents at $5.14-1/2 per bushel.

USDA in its first official forecasts for the 2020-21 marketing year projected U.S. corn ending stocks at 3.318 billion bushels, the largest since 1987-88, as falling demand for corn-based ethanol and animal feed due to the COVID-19 pandemic coupled with massive planting projections.

But that outlook was offset by smaller-than-expected old-crop inventories, as the agency trimmed its estimates of harvested acres and yield from last year’s corn crop.

“The new crop — I’m not going to say it’s bullish. It’s not a good-looking number,” said Joe Vaclavik, president of Standard Grain. “The old crop, those are real numbers, you can take that to the bank.”

For soybeans, USDA raised its forecast of 2019-20 soybean ending stocks to 580 million bushels, up from 480 million last month and above even the highest in a range of trade expectations. But the government projected soy stocks falling to 405 million bushels by the end of 2020/21, below the average estimate in a Reuters survey of 430 million.

Some analysts cautioned that 2020-21 soybean supplies could rise if U.S. farmers end up planting more of the oilseed than USDA projected.

“How much of these corn acres have gone over to beans? I don’t think this report reflects this. It’s about as bullish to beans as it’s going to get,” said Bob Utterback, president of Utterback Marketing.

Soybean futures were underpinned by fresh export demand. USDA through its daily reporting system confirmed private sales of 136,000 tonnes of U.S. soybeans to China.

Wheat futures fell on improving weather outlooks and outlooks for rising global stockpiles.

“Wheat is seeing weakness today partly because of better crop weather in the United States, where fear about cold temperatures is receding. Welcome rain has also been received by wheat in parts of the European Union and Black Sea region,” said Matt Ammermann, commodity risk manager at INTL FCStone.

USDA raised its forecast of 2019-20 world wheat ending stocks to 295.12 million tonnes, from 292.78 million last month, and projected that 2020-21 world stocks would climb to 310.12 million tonnes, above a range of trade expectations.

— Reporting for Reuters by Christopher Walljasper and P.J. Huffstutter; additional reporting by Michael Hogan and Naveen Thukral.

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