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May 12 USDA numbers a neutral surprise

By Doug Tenney, Leist Mercantile

Plenty of numbers today.

Old corn exports were increased 50 million bushels, big surprise, while corn for ethanol was cut 100 million bushels, also a surprise. Old crop soybean exports were cut 100 million bushels, while crush was unchanged.

Shortly after the USDA report was released, corn was unchanged, soybeans down 2 cents, and wheat down 7 cents. Just before the noon report, grains were all lower with corn down 3 cents, soybeans down 2 cents, while wheat was down 5 cents.

Ahead of the report, many had expected it to be neutral to bearish report for grains. Old crop corn demand was expected to drop 150 million to 200 million bushels due to lower exports and lower corn for ethanol. Old crop soybean demand was expected to drop 50 million to 100 million bushels from lower exports.

This report had the first supply and demand tables for 2020-2021 grains. New crop corn demand was expected to drop 300 million to 400 million bushels from what had been expected two months ago. For nearly two months many had expected new crop corn ending stocks to reach 3.3 to 3.7 billion bushels. Some have already expected the front number would be at least 4 billion bushels. Shrinking demand for ethanol and lower exports have been the primary drivers for corn ending stocks to increase for both old and new corn. This demand loss has pushed the July CBOT corn to several new record lows in the past month.

Old crop ending stocks were expected to increase for both corn and soybeans. Old crop corn ending stocks were 2.098 billion bushels, last month was 2.092 billion bushels. Old crop soybean ending stocks were up 100 million bushels, last month was 480 million bushels. Wheat ending stocks for old crop were 978 million bushels. Last month they were 970 million bushels.

New crop corn ending stocks were 3.318 billion bushels; the average trade estimate was 3.389 billion bushels. Soybean new crop ending stocks were 405 million bushels, while the average trade estimate was 430 million bushels. Wheat new crop ending stocks were 909 million bushels; the average trade estimate was 814 million bushels.

World wheat stocks are record high. Rains in both Europe and Russia have improved ideas for higher production in both regions. July Kansas City wheat closed last night below the $4.77 which was the 50-day moving average. Both Chicago and Kansas City wheat have been on the defensive since mid-April.

The weekly U.S. Crop Progress Report last night had the U.S. corn planted at 67% and U.S. soybeans at 38% planted. The corn planting pace is above average and throws out the potential for planting delay rallies this spring. Temperatures over the weekend were freezing and below for much of the Midwest and Upper Plains as they reached the coldest temperatures since 1966 for this time of year. It appears to not be a game changer at this time. Some damage was expected but not widespread damage across multiple states.

Last month Brazil set a new record for soybean exports, shipping 600 million bushels with most of it headed to China. Brazil soybean production was 124 million tons. Last month it was 124.5 million tons. Argentina soybean production was 51 million tons, last month was 52 million tons.

China has been a buyer of both old and new corn and soybeans from the U.S. this past week. Ten days ago the total for China’s purchase of U.S. agricultural goods stood at $14.5 billion. Many are doubting China will be able to reach the $36 billion level spelled out with the signing of the Phase 1 trade deal earlier this year. Late last week there was a scheduled phone call between U.S. and China trade officials. Both sides reported progress was made with that phone call. Additional trade talks are expected in coming weeks.

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