Corn and soybean futures eased back after US officials disappointed investors by failing to trim forecasts for domestic inventories of both crops as had been expected, while upgrading estimates for world stocks.
Chicago corn futures for May, which had stood marginally lower ahead of the US Department of Agriculture’s Wasde report, fell to $5.36 ½ a bushel in the immediate aftermath, a drop of 1.9% on the day, before recovering some ground in later deals.
Soybean futures for May swung into negative territory after the briefing, a key event of the agricultural commodities calendar, before edging back up to $14.36 a bushel, a gain of 0.2%.
The losses put temporary pressure too onto the wheat complex despite the Wasde cutting the forecasts for world stocks at the close of 2020-21 by 3.0m tonnes – far more than investors had forecast.
Chicago soft red winter wheat recovered ground in late trading to stand up 1.4% at $6.55 ¼ a bushel.
‘More favourable yield prospects’
In contrast to wheat, the Wasde raised forecasts for world stocks of corn and soybeans, against market expectations of downgraded estimates.
For corn, the forecast for world stocks at the close of 2020-21 was raised by 1.14m tonnes to 287.67m tonnes, as the USDA lifted forecasts for harvests in Bangladesh, India and in major exporter South Africa.
“South Africa corn production is raised reflecting more favourable yield prospects,” the USDA said, adding that “beneficial La Niña rains from November through January allowed farmers to plant earlier than normal and to plant more corn area than in recent years”.
The USDA left its estimate for domestic corn stocks at the end of the season at 1.502bn bushels. Investors had, after a strong recent US export performance, expected a downgrade, to 1.470bn bushels.
Argentina vs Brazil
For soybeans, the USDA raised its forecast for world stocks by 380,000 tonnes to 83.74m tonnes a figure which – while down 12.3m tonnes year on year – was 1.0m tonnes above the number that investors had expected.
Although the forecast for Argentine soybean production this season was reduced by 500,000 tonnes to 47.5m tonnes, “due to dry weather conditions over the past month”, the Brazilian harvest was upgraded by 1.0m tonnes to 134.0m tonnes on an increased yield estimate.
This revision reflected in part a change to trend yield calculation, but also improved hopes for the in Rio Grande do Sul harvest, which “offset the current reductions in the Centre West states”, where “high rainfall prevents equipment from entering fields and high humidity affects yield”.
For US soybeans, the forecast for carryout stocks was held at 120m tonnes, again disappointing some investors who had expected a downgrade to account for a bumper export performance.
Argentine vs US
Futures in soyoil, which have set a series of eight-year highs, lost a little altitude after the USDA in the Wasde raised its forecast for US carryout stocks of the vegetable oil by 70,000 tonnes to 1.18m tonnes, on a lower export estimate.
Argentine supplies, for which the export estimate was raised by 250,000 tonnes to 6.00m tonnes, were seen as more than picking up the slack, a knock-on effect of reduced demand from biofuels plants.
“With declining demand for biodiesel, Argentina exports of soybean oil have been rising despite lower crush,” the USDA said.
Chicago soyoil futures for May stood up 1.4% at 53.21 cents a pound in late deals, but a little below their pre-Wasde high of 53.49 cents a pound.
‘Lack of demand’
Meanwhile, in the wheat complex, Kansas City hard red winter wheat futures proved an underperformer, in standing up 0.5% at $6.25 a bushel, after the Wasde – while leaving at 836m bushels the forecast for US all-wheat stocks at the close of 2020-21 – altered allocations between classes.
For hard red winter wheat, the stocks estimate was raised by 21m bushels to 383m bushels, on weakened US export hopes, as “commitments to several western hemisphere markets are below a year ago”.
The USDA noted a “lack of demand, both domestically and abroad as US wheat is uncompetitive in several export markets in the western hemisphere”, although raised expectations for exports of soft white winter wheat.