February 10, 2021

USDA: Export demand will cut into tight US corn and soybean supplies

The United States Department of Agriculture (USDA) said strong export demand will cut into tight US corn and soybean supplies mora than projected previously, Reuters reported.

This could mean that corn and soybean stockpiles in the country may be the smallest in seven years before the next round of crops are harvested. Importers and domestic processors have started to buy up crops following the forecasts for low supplies.

Corn stock outlook remained higher than projected, resulting in a sell-off in the futures market that reached a 7 1/2 year high before the USDA report was released. Traders speculated that the US may not be able to meet rising corn demand from China after less-than-expected increase in the corn export forecast.

Ted Seifried, chief ag market strategist at Zaner Group, said there are sales, but questioned if there will be shipments to China.

The USDA's monthly World Agricultural Supply and Demand Estimates report forecasted corn ending stocks for the 2020/21 marketing year at 1.502 billion bushels, with soybean ending stocks at 120 million bushels. This was 1.552 billion and 140 million for corn and soybean respectively last month.

Analysts' projections of the report, based on a Reuters poll average of estimates, were corn ending stocks at 1.392 billion and soy ending stocks at 123 million.

The USDA increased its soybean exports outlook to 2.250 billion (up 20 billion) and its corn export projection to 2.600 billion (up 50 million), but kept its soybean crush unchanged at 2.200 billion bushels.

Wheat end stocks were pegged at 836 million, unchanged from the January report.

Corn and wheat futures on the Chicago Board of Trade turned negative following the report's publication, while soybean futures fell from three week highs.

- Reuters