Eagerly awaited USDA reports on par with trade estimates
The much-anticipated set of U.S. Department of Agriculture reports released Friday, Jan. 10, provided a major data dump for the market, but most numbers came in close to trade estimates.
USDA released Quarterly Stocks, the World Agriculture Supply and Demand Estimates and U.S. Winter Wheat Seedings.
The agency estimated U.S. corn yield at 168 bushel per acre, which was up 1 bushel from December.
Harvested acres were revised slightly to 81.5 million acres, down 300,000 from last month. That put production at 13.692 billion bushels which is up 31 million bushels from the last report. However, ending stocks were still lowered on the final report to 1.892 billion bushels. Quarterly stocks were reported at 11.39 billion bushel.
The USDA plans to resurvey farmers for acreage in Michigan, Minnesota, North Dakota, South Dakota and Wisconsin.
Soybean yield was raised by 0.5 bushels per acre to 47.4 with a lowering of harvested acres by 600,000 acres to 75 million. That translated into a 3.558-billion-bushel production figure, with ending stocks at 475 million bushels, unchanged from December. Quarterly stocks were set at 3.25 billion bushel which is under last year's 3.746 billion.
The summary for U.S. winter wheat seedings showed all winter wheat at 30.8 million acres, which is down from 31.2 million in the 2019-20 marketing year. Hard red winter wheat acreage was 21.8 million of that total and down from 22.5 million acres last season. Soft red winter wheat seedings were estimated at 5.64 million acres but up from 5.2 million in 2019-20.
Wheat ending stocks on a domestic basis were lowered by 9 million bushels from last month to 965 million. Quarterly stocks were projected at 1.83 billion bushels.
World corn ending stocks were lowered for corn and wheat but increased on soybeans. USDA projects corn carryout at 297.8 million metric tons, soybeans stocks at 96.7 million metric tons and wheat at 288.1 million metric tons.
John Nelson with Producers Livestock in Sioux City, Iowa, says after months of speculation about the reports, farmers were undoubtedly disappointed. Most farmers had expected yields to be lowered with the adverse season, but instead they were raised for both corn and soybeans. Harvested acres are also in question as Nelson says they were lowered by 300,000 on corn and 600,000 on soybeans, which didn't make sense considering the record number of prevented planting acres in the spring in 2019.
"Most of the trade expected that to be reversed," he says.
In the end, the important number is still the ending stocks, which were left unchanged on soybeans, but corn was lowered. Nelson says USDA lowered export demand as expected, but increased feed usage, which translated into a lower final carryout.
Ami Heesch of CHS Hedging says even with lower acreage of wheat there are no shortage concerns.
"If you look at the past few years, we've had all wheat acres at 45 million but still managed to have a nearly 1-billion-bushel carryout."
She adds that the winter wheat stocks-to-use ratio is at 56.5%, which is not a friendly number. However, Heesch says there are some world production issues that are helping support wheat prices, including a drop in the Russian and Australian crop.
"However, I think much of that may already be factored into prices," she says.
With these reports out of the way, market analysts says the market will focus on the China phase one trade deal details, South American weather and the USDA Prospective Plantings Report on March 31.