U.S. corn ending stocks came in slightly higher in Wednesday's USDA World Agricultural Supply and Demand Estimates (WASDE) report, while soybean ending stocks are seen slightly lower from last month's estimate amid reports that crop conditions, "the best in four years" for the corn- and soybean-growing areas of the nation, could push down corn prices through the summer.
The result: Lower prices across the board for corn, soybean and wheat futures on Wednesday, with nearby corn closing 4 1/2 cents lower at $4.41 per bushel, nearby soybeans ending the day 8 3/4 lower at $12.20 3/4 per bushel and nearby wheat ending 12 cents lower at $5.89 1/4, according to Barchart.com.
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Wednesday's WASDE report projects a 1.726 billion-bushel ending stock number for corn vs. earlier expecations by the trade of a 1.70 billion-bushel figure, a slightly bearish number. On the flipside, Wednesday's report pegs soybean ending stocks for the 2014-2015 marketing year at 325 million bushels. That's down slightly from the May estimate but still about 6 million above the average trade guess heading into Wednesday's report.
"The projected U.S. corn yield remains at 165.3 bushels per acre as a slightly slower-than-normal mid-May planting progress is expected to be offset by very favorable early-season crop and weather conditions. U.S. crop conditions in the most recent Crop Progress report are the best in four years for the aggregated 18 reported states and better than any time since 2007 for the Corn Belt. The projected range for the 2014/15 season-average farm price is unchanged at $3.85 to $4.55 per bushel and below this month's lower projected 2013/14 range of $4.45 to $4.65 per bushel. The 2013/14 price range is lowered 10 cents per bushel at the midpoint based on prices reported to date and the recent decline in nearby cash and futures prices," according to Wednesday's report. "The 2014/15 season-average price for soybeans is projected at $9.75 to $11.75 per bushel, unchanged from last month. Soybean meal and soybean oil prices are projected at $355 to $395 per short ton, and 37 to 41 cents per pound, respectively. Product price projections are also unchanged from last month."
TRADE REACTION
Today's USDA Stocks Report is largely a nonevent, with the notable exception of a clear disconnect between the higher corn yield anticipated by the trade and the unchanged yield of 165.3 bushels an acre estimate in today's report, according to Sal Gilbertie, Teucrium Trading.
"Ironically, the USDA's delay in raising yield estimates could be in response to the near-perfect weather conditions experienced so far this year; any deterioration in weather patterns through pollination in July would allow the USDA to keep its yield projections relatively stable," Gilbertie says.
Soybean numbers had no surprises with tight old-crop inventories continuing, he says. "Wheat expectations are based largely upon the current noncompetiveness in the global markets of U.S. wheat; U.S. food use and exports were reduced accordingly. The global balance sheet of wheat remains well supplied by more than adequate non-U.S. global production. Worth noting is the global increase in demand for both corn and wheat, which seems to indicate lower prices are stimulating increased demand."
Dustin Johnson, EHedger grain analyst, says the report wasn't much of a surprise, just another confirmation that a big crop is coming. "The reaction to sell corn, sell wheat, but keep soybeans supported is the same trend we have seen for the past month. That is the favorite of the funds and the real story of why these relationships are behaving the way they are," Johnson says.
