Weekly Market Review
Grain prices continued their movement higher this week after the USDA January supply and demand report. The January report is when the USDA finalizes yields for the previous harvest. Corn was the big news makers as the USDA made larger than expected adjustments. The most notable change by the USDA was the large decrease in their domestic corn yield. They dropped yield a large 3.8 bushels per acre to 172 bushels per acre, a new record decrease from the November to January reports. Pre trade estimates were to see a minor half bushel decrease. The reduced yield and an increase to old crop feed usage resulted in a 400 million bushel decrease in supply.
Several changes were made to the demand side of the balance sheet as well. Exports were reduced 100 million bushels, feed usage decreased 50 million and ethanol demand decreased 100 million. Total demand decreased 250 million bushels leaving carryout at 1.55 billion bushels, 150 million bushels less than December and about 50 million bushels less than pre-report estimates.
The higher corn prices are heightening concerns of ethanol demand as margins remain deep in the red for most plants. In Tuesday’s report, the USDA decreased ethanol to 4.950 billion bushels annually. Current estimated corn usage for the marketing year for ethanol is around 1.81 billion bushels, 113 million below last year’s pace. However, after the USDA reduced usage on the report, current usage is 30 million bushels ahead of the pace needed. U.S. biofuels representatives met this week with incoming White House administration to build support for biofuels to help reduce carbon emissions.
The USDA decreased soybean yield half bushel per acre to 50.2, slightly less than expectations.
Another supply change wasan increase of 20 million bushels to imports, offsetting some of the smaller production. As expected, increases were made to both crush and export demand, a total of 35 million bushels between the two. Residual was decreased 13 million to leave a net decrease in carryout of 35 million bushels to 140 million bushels.
The USDA increased their soybean export sales forecast by 30 million bushels in this week’s report. With this week’s sales data included, marketing year to date sales total 2.046 billion bushels compared to the new yearly forecast of 2.230 billion. Sales will likely slow in the near future as South American soybeans become available. However, with 33 weeks remaining in the marketing year, sales only need to average 5.5 million bushels each week to reach the new target.
Export sales for the week ending January 7thfavored corn and soybeans over wheat. Corn sales totaled 56.6 million bushels, well above trade’s expectations and the weekly total needed to reach the newly reduced USDA estimate. Soybean sales were also above expectations and well above the weekly total needed at 33.4 million bushels. Sales of 12 million bushels were also reported for new crop 2021. Wheat sales were reported at 8.2 million bushels, which was below the expected range but above the total needed.
For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at email@example.com. The opinions and views expressed in this commentary are solely those of Adam Suntken. 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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