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DTN: Corn, bean markets sluggish

By Staff | Jan 19, 2017

ALTHOUGH U.S. FARMERS harvested their third consecutive record yield last fall, demand is also at a record high. According to USDA’s Jan. 12 stocks report, ending stocks on the huge supply is starting to come down, which has spurred the market’s future prices upward.

By KAREN SCHWALLER

kschwaller@evertek.net

Market reaction to the USDA’s final 2016 production numbers and December quarterly stocks report, issued Jan. 12, has been neutral in corn, and neutral to bullish on the soybean side, according to Darin Newsom, senior marketing analyst for DTN.

Newsom said there were “lots of surprises” in the report, but nothing that was “overly shocking.”

He said the biggest news was a slight bullish trend in the soybeans, between smaller-than-expected ending stocks, decreased production and an unchanged demand in domestic soybeans.

Newsom said U.S. soybean production was tagged at 4.38 billion bushels, which he said is a steep number by comparison to anything seen in the past. But he said the expected increase going into the report was 4.44 bb.

“The fact that we were below the average pre-report estimate of 4.44 bb,” he said, “but still above the December number of 4.36 bb, you almost have to consider it a little bullish because we had built in (a little larger) expectation.

“This was a bit of a surprise and is one of the reasons we’re seeing double-digit gains in the soybean market right now.”

He said global ending stocks were less than expected at 420 million bushels, and domestic ending stocks are trending down as well.

“We know that domestic ending stocks are starting to come down,” Newsom said, adding that the U.S. has just put the third year of record production behind them. “We usually decrease about 60 percent from the highest USDA ending stocks projection.”

He said it has happened three consecutive times now (with record harvests involved).

“There is a systematic miscalculation of overall demand for U.S. soybeans or an overstatement of supplies; whichever it might be,” he said.

Newsom said with ending stocks being down by 60 million bushels, it may have taken the market by surprise.

U.S. soybean demand remained the same at 4.1 bb, and with a 54 mb production reduction and a 5 mb decrease in imports explains the 60 mb overall reduction.

“But we’re still sitting on a record high,” Newsom said.

December ending stocks were less than expected, coming in at 2.89 bb, with average estimates coming in at 2.951 bb.

“The strong demand we saw over (the last quarter) is reflected in the slightly lower ending stocks,” Newsom said. “These are record stocks. It’s huge. But if we look at the quarterly stocks as the percent of total supplies, then the picture starts to look more bullish.”

He said over the last 20 years, total leftover supplies come in around 65 percent.

“We’re in a more bullish situation than we were last year at this time,” Newsom said, adding that total first quarter demand was very high, which pulled on a record supply. He said this means the quarterly stocks as a percent of total supply isn’t “out of line.”

Newsom suspects the market could be a reflection of the demand being frontloaded prior to the inauguration of president-elect Donald Trump.

Newsom said the South American harvest estimates in Brazil and Argentina remain steady to increased.

“For now it hasn’t shown up as an expected decrease for U.S. soybeans,” he said, “but it certainly could as we get into the South American harvest and beyond.”

Domestic production reduction came from fewer planted and harvested acres, and yield numbers were lowered. Imports dropped as well.

Corn goes neutral

Newsom said there were far less “fireworks” on the corn side, with a neutral trend keeping the corn market a little more dead in the water.

He said the market has known production would be high globally. U.S. production came in at 15.148 bb, with trade anticipating just short of 15.2 bb, resulting in a 78 mb decrease.

He said U.S. corn yields produced average to slightly above average yield, not producing what had been expected.

“But this hasn’t been enough to light a fire under the market,” Newsom said.

He said domestic ending stocks were less than expected (2.355 bb) because of decreased production that was offset by decreased demand. He said a plentiful supply of ending stocks is putting some pressure on the corn market.

Newsom said global ending stocks were smaller than expected (just under 221 mmt) due to decreased production and slightly larger demand. He said world ending stocks to use remains stable.

Quarterly ending stocks were larger than expected, and the corn market experienced the largest first quarter stocks and demand on record.

“This is misleading because we knew there was record large Dec. 1 corn stocks, but it doesn’t really matter,” said Newsom. “If we look at what our quarterly corn stocks were as a percent of total supply, it’s running right around average-so there’s nothing overly alarming.”

More concerning to him, he said, is what will play out with trade issues post-inauguration with Mexico and Japan. He said second quarter will most likely call for more feed demand, but, he said, he wouldn’t be surprised to see export demand fall off in the second quarter.

He said it’s the opposite of what usually happens then because of the switch-over from soybean shipments due to the South American harvest.

“With this huge out-pacing that we’ve seen over the first quarter as compared to last year, I think it’s going to be pulled back a little bit,” he said. “Now the average will pull back again and I think we’ll see overall demand start to come back down.”

Overall in the corn supply, production, harvested acres, yields and beginning stocks were down, imports increased and total supplies were down. On the demand side, feed and residual use was down, food/seed remained the same, ethanol demand rose, exports remained unchanged and total use was down slightly, as was total ending stocks and ending stocks to use.

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DTN: Corn, bean markets sluggish

By Staff | Jan 19, 2017

ALTHOUGH U.S. FARMERS harvested their third consecutive record yield last fall, demand is also at a record high. According to USDA’s Jan. 12 stocks report, ending stocks on the huge supply is starting to come down, which has spurred the market’s future prices upward.

By KAREN SCHWALLER

kschwaller@evertek.net

Market reaction to the USDA’s final 2016 production numbers and December quarterly stocks report, issued Jan. 12, has been neutral in corn, and neutral to bullish on the soybean side, according to Darin Newsom, senior marketing analyst for DTN.

Newsom said there were “lots of surprises” in the report, but nothing that was “overly shocking.”

He said the biggest news was a slight bullish trend in the soybeans, between smaller-than-expected ending stocks, decreased production and an unchanged demand in domestic soybeans.

Newsom said U.S. soybean production was tagged at 4.38 billion bushels, which he said is a steep number by comparison to anything seen in the past. But he said the expected increase going into the report was 4.44 bb.

“The fact that we were below the average pre-report estimate of 4.44 bb,” he said, “but still above the December number of 4.36 bb, you almost have to consider it a little bullish because we had built in (a little larger) expectation.

“This was a bit of a surprise and is one of the reasons we’re seeing double-digit gains in the soybean market right now.”

He said global ending stocks were less than expected at 420 million bushels, and domestic ending stocks are trending down as well.

“We know that domestic ending stocks are starting to come down,” Newsom said, adding that the U.S. has just put the third year of record production behind them. “We usually decrease about 60 percent from the highest USDA ending stocks projection.”

He said it has happened three consecutive times now (with record harvests involved).

“There is a systematic miscalculation of overall demand for U.S. soybeans or an overstatement of supplies; whichever it might be,” he said.

Newsom said with ending stocks being down by 60 million bushels, it may have taken the market by surprise.

U.S. soybean demand remained the same at 4.1 bb, and with a 54 mb production reduction and a 5 mb decrease in imports explains the 60 mb overall reduction.

“But we’re still sitting on a record high,” Newsom said.

December ending stocks were less than expected, coming in at 2.89 bb, with average estimates coming in at 2.951 bb.

“The strong demand we saw over (the last quarter) is reflected in the slightly lower ending stocks,” Newsom said. “These are record stocks. It’s huge. But if we look at the quarterly stocks as the percent of total supplies, then the picture starts to look more bullish.”

He said over the last 20 years, total leftover supplies come in around 65 percent.

“We’re in a more bullish situation than we were last year at this time,” Newsom said, adding that total first quarter demand was very high, which pulled on a record supply. He said this means the quarterly stocks as a percent of total supply isn’t “out of line.”

Newsom suspects the market could be a reflection of the demand being frontloaded prior to the inauguration of president-elect Donald Trump.

Newsom said the South American harvest estimates in Brazil and Argentina remain steady to increased.

“For now it hasn’t shown up as an expected decrease for U.S. soybeans,” he said, “but it certainly could as we get into the South American harvest and beyond.”

Domestic production reduction came from fewer planted and harvested acres, and yield numbers were lowered. Imports dropped as well.

Corn goes neutral

Newsom said there were far less “fireworks” on the corn side, with a neutral trend keeping the corn market a little more dead in the water.

He said the market has known production would be high globally. U.S. production came in at 15.148 bb, with trade anticipating just short of 15.2 bb, resulting in a 78 mb decrease.

He said U.S. corn yields produced average to slightly above average yield, not producing what had been expected.

“But this hasn’t been enough to light a fire under the market,” Newsom said.

He said domestic ending stocks were less than expected (2.355 bb) because of decreased production that was offset by decreased demand. He said a plentiful supply of ending stocks is putting some pressure on the corn market.

Newsom said global ending stocks were smaller than expected (just under 221 mmt) due to decreased production and slightly larger demand. He said world ending stocks to use remains stable.

Quarterly ending stocks were larger than expected, and the corn market experienced the largest first quarter stocks and demand on record.

“This is misleading because we knew there was record large Dec. 1 corn stocks, but it doesn’t really matter,” said Newsom. “If we look at what our quarterly corn stocks were as a percent of total supply, it’s running right around average-so there’s nothing overly alarming.”

More concerning to him, he said, is what will play out with trade issues post-inauguration with Mexico and Japan. He said second quarter will most likely call for more feed demand, but, he said, he wouldn’t be surprised to see export demand fall off in the second quarter.

He said it’s the opposite of what usually happens then because of the switch-over from soybean shipments due to the South American harvest.

“With this huge out-pacing that we’ve seen over the first quarter as compared to last year, I think it’s going to be pulled back a little bit,” he said. “Now the average will pull back again and I think we’ll see overall demand start to come back down.”

Overall in the corn supply, production, harvested acres, yields and beginning stocks were down, imports increased and total supplies were down. On the demand side, feed and residual use was down, food/seed remained the same, ethanol demand rose, exports remained unchanged and total use was down slightly, as was total ending stocks and ending stocks to use.

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DTN: Corn, bean markets sluggish

By Staff | Jan 19, 2017

ALTHOUGH U.S. FARMERS harvested their third consecutive record yield last fall, demand is also at a record high. According to USDA’s Jan. 12 stocks report, ending stocks on the huge supply is starting to come down, which has spurred the market’s future prices upward.

By KAREN SCHWALLER

kschwaller@evertek.net

Market reaction to the USDA’s final 2016 production numbers and December quarterly stocks report, issued Jan. 12, has been neutral in corn, and neutral to bullish on the soybean side, according to Darin Newsom, senior marketing analyst for DTN.

Newsom said there were “lots of surprises” in the report, but nothing that was “overly shocking.”

He said the biggest news was a slight bullish trend in the soybeans, between smaller-than-expected ending stocks, decreased production and an unchanged demand in domestic soybeans.

Newsom said U.S. soybean production was tagged at 4.38 billion bushels, which he said is a steep number by comparison to anything seen in the past. But he said the expected increase going into the report was 4.44 bb.

“The fact that we were below the average pre-report estimate of 4.44 bb,” he said, “but still above the December number of 4.36 bb, you almost have to consider it a little bullish because we had built in (a little larger) expectation.

“This was a bit of a surprise and is one of the reasons we’re seeing double-digit gains in the soybean market right now.”

He said global ending stocks were less than expected at 420 million bushels, and domestic ending stocks are trending down as well.

“We know that domestic ending stocks are starting to come down,” Newsom said, adding that the U.S. has just put the third year of record production behind them. “We usually decrease about 60 percent from the highest USDA ending stocks projection.”

He said it has happened three consecutive times now (with record harvests involved).

“There is a systematic miscalculation of overall demand for U.S. soybeans or an overstatement of supplies; whichever it might be,” he said.

Newsom said with ending stocks being down by 60 million bushels, it may have taken the market by surprise.

U.S. soybean demand remained the same at 4.1 bb, and with a 54 mb production reduction and a 5 mb decrease in imports explains the 60 mb overall reduction.

“But we’re still sitting on a record high,” Newsom said.

December ending stocks were less than expected, coming in at 2.89 bb, with average estimates coming in at 2.951 bb.

“The strong demand we saw over (the last quarter) is reflected in the slightly lower ending stocks,” Newsom said. “These are record stocks. It’s huge. But if we look at the quarterly stocks as the percent of total supplies, then the picture starts to look more bullish.”

He said over the last 20 years, total leftover supplies come in around 65 percent.

“We’re in a more bullish situation than we were last year at this time,” Newsom said, adding that total first quarter demand was very high, which pulled on a record supply. He said this means the quarterly stocks as a percent of total supply isn’t “out of line.”

Newsom suspects the market could be a reflection of the demand being frontloaded prior to the inauguration of president-elect Donald Trump.

Newsom said the South American harvest estimates in Brazil and Argentina remain steady to increased.

“For now it hasn’t shown up as an expected decrease for U.S. soybeans,” he said, “but it certainly could as we get into the South American harvest and beyond.”

Domestic production reduction came from fewer planted and harvested acres, and yield numbers were lowered. Imports dropped as well.

Corn goes neutral

Newsom said there were far less “fireworks” on the corn side, with a neutral trend keeping the corn market a little more dead in the water.

He said the market has known production would be high globally. U.S. production came in at 15.148 bb, with trade anticipating just short of 15.2 bb, resulting in a 78 mb decrease.

He said U.S. corn yields produced average to slightly above average yield, not producing what had been expected.

“But this hasn’t been enough to light a fire under the market,” Newsom said.

He said domestic ending stocks were less than expected (2.355 bb) because of decreased production that was offset by decreased demand. He said a plentiful supply of ending stocks is putting some pressure on the corn market.

Newsom said global ending stocks were smaller than expected (just under 221 mmt) due to decreased production and slightly larger demand. He said world ending stocks to use remains stable.

Quarterly ending stocks were larger than expected, and the corn market experienced the largest first quarter stocks and demand on record.

“This is misleading because we knew there was record large Dec. 1 corn stocks, but it doesn’t really matter,” said Newsom. “If we look at what our quarterly corn stocks were as a percent of total supply, it’s running right around average-so there’s nothing overly alarming.”

More concerning to him, he said, is what will play out with trade issues post-inauguration with Mexico and Japan. He said second quarter will most likely call for more feed demand, but, he said, he wouldn’t be surprised to see export demand fall off in the second quarter.

He said it’s the opposite of what usually happens then because of the switch-over from soybean shipments due to the South American harvest.

“With this huge out-pacing that we’ve seen over the first quarter as compared to last year, I think it’s going to be pulled back a little bit,” he said. “Now the average will pull back again and I think we’ll see overall demand start to come back down.”

Overall in the corn supply, production, harvested acres, yields and beginning stocks were down, imports increased and total supplies were down. On the demand side, feed and residual use was down, food/seed remained the same, ethanol demand rose, exports remained unchanged and total use was down slightly, as was total ending stocks and ending stocks to use.

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