Weekly Market Review
The USDA’s May WASDE report held some surprises. The 2019 corn crop production did get lowered by 29 million bushels to 13.663 billion due to South Dakota being resurveyed. 2020 corn production is estimated at 15.996 billion bushels, which is a new record. Also, 2020-21 corn ending stocks are estimated at 3.318 billion bushels, the largest ending stocks since the 80’s. Still slightly lower than trade expectations of 3.389 billion, relief coming from the demand side. Feed, ethanol, and exports all saw notable increases for the 20/21 marketing year from the 19/20 estimates. Corn feed usage estimates for 20/21 came in at a large 6.050 billion bushels, 350 million above this year and 620 million above 18/19 crop year. The USDA’s target is very aggressive for this early on in the year.
Old crop soybean ending stock were above trade estimates at 580 million bushels. However, ending stock estimates for 20/21 were below trade expectation at 405 million bushels. The USDA printed 20/21 bean exports to reach 2.05 billion bushels, the highest since the 17/18 marketing year.
USDA’s acreage numbers came from the March planting intentions report. Which had corn acres for the upcoming crop year at 97 million acres and soybeans at 83.5 million acres. Trade has been debating and will likely continue to debate these acreage numbers. One side believes market conditions have been more suitable to plant soybeans since March. Also, there has been poor planting conditions in some fringe areas which analyst estimate to be turned to soybean acres. On the other hand, ideal soil conditions and near record planting progress in major corn producing states will lead to higher acreage numbers. In addition, Informa/Vantage released there expected planted acreage report for 2020. Corn acres were lower than the USDA’s estimate at 94.16 million acres, and soybeans were above at 85.890 million acres. As trade rolls into summer, the acreage debate will undoubtedly continue.
Ethanol production for the week ending May 8th increased 19,000 barrels per day to 617,000 barrels per day, with the Midwest region showing a gain of 17,000 barrels per day. In total increasing 3.2% from the previous week. This is still down over 41% from a year ago. Ethanol stocks showed a decrease of 1.4 million barrels to 21.2 million barrels. This is the second largest weekly drop on record. Also the lowest inventory level in seven weeks. Gasoline demand continues to show increases as more states are reopening and more people are heading back to work.
The soybean markets have been under pressure recently with increasing tension between the U.S. and China over how China handled the early spread of the Coronavirus. Australia, Canada, and UN are all looking into repercussions for how China has responded. Traders are concerned that the phase one trade deal could be dissolved if the world’s two biggest economies aren’t able to come to a resolution. China has made several purchases of soybeans this week, helping to ease some of those concerns.
For more information, you may contact Alex Londerville at (515)-341-7040, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Alex Londerville. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
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