A Welcome Surprise by USDA

On Friday, the USDA surprised the market by reporting lower quarterly ending stocks and also reducing both corn and soybean yields. This resulted in meaningful reductions in 24/25 US corn and soybean ending stocks.

Quarterly Grain Stocks

• Corn stocks as of Dec 1 were reported at 12,074 million bu vs average analyst guess of 12,147.
• Soybean stocks as of Dec 1 were reported at 3,100 million bu vs average analyst guess of 3,208.

24/25 Domestic Supply and Demand

Corn

• Corn yield was reduced from 183.1 bu/acre projected in Dec to 179.3 bu/acre.
• Corn ending stocks were reduced 198 million bushels from the Dec WASDE report to 1.540 billion bu. Projected stocks to use is now 10.2%.
• This compares to ending stocks in 22/23 of 1,360 mbu and 23/24 of 1,763 mbu.

Soybeans

• Soybean yield was reduced from 51.7 bu/acre projected in Dec to 50.7 bu/acre.
• Soybean ending stocks were reduced 90 million bushels from the Dec WASDE report to 380 mbu. Projected stocks to use is now 8.75%
• Internationally 24/25 Arg and Brazil soybean production was left unchanged.
• 24/25 world soybean ending stocks was reduced to 128.37 MMT from 131.87 MMT.

My thoughts...

This is more bullish news for Corn as ending stocks are now well below last year and stocks to use ratio is just a hair over 10%. This will make the market even more sensitive to Argentina and Brazil weather forecasts especially dryness persists. Prices moved higher on Friday and closed near the high side of uptrend channel. March '24 Corn may find resistance around $4.68-4.75 from a previous support (which now may turn to resistance), a 62% retracement from May 15th highs to Aug 26th lows and the trend line drawn from recent highs. We are also moving into a period where market participants start talking about acres shifting out of soybeans and into corn which could act as a headwind for new crop corn prices.

For soybeans, global carryout remains burdensome at 128.37 MMT. Additionally, weak economic conditions in China, along with the potential for new tariffs or trade disputes and a rapidly approaching Brazilian soybean harvest all present bearish risks ahead.

Where do you think the market goes from here?

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