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Demand for corn and soybeans remains high

By Kriss Nelson - Farm News editor | Apr 20, 2021



One of the last USDA World Agricultural Supply and Demand Estimate (WASDE) reports that focuses on old crop numbers was released April 9 – a report that typically doesn’t garner much attention from the market.

Todd Hultman, DTN lead analyst said the price response was fairly mute at the time of the report and feel the reason is due to the focus on old crop numbers.

“We really didn’t see any big significant changes today,” he said. “We did see some interesting changes in the world numbers that was probably the most interesting part of today’s report.”


Hultman considered the April WASDE report neutral to bullish for corn.

The U.S. ending stocks estimate came in at 1.35 billion bushels (bb), which was expected and down from the 1.50 bb from last month.

Hultman said, in his personal opinion, the U.S. ending stocks are closer to 1.2 bb – or maybe even less.

“We haven’t seen USDA acknowledge the market being as tight as what the market seems to think it is,” he said. “It will continue to be a bit of a conflict that we will keep our eye on moving forward.”

There were three changes in the demand estimates. Feed and residual demand was increased by 50 million bushels (mb) up to 5.7 bb; ethanol demand estimate was increased 25 mb to 4.975 bb and the export estimate was up 75 mb from last month’s estimate to 2.675 bb.

There seems to be a lot of bullish pressure in our domestic corn market which includes the basis.

“These are the strongest basis levels we’ve seen in many years – as far as domestic corn demand is in the U.S. it remains very strong with supplies tight and limited,” he said. “That’s one of the reasons why I continue to expect USDA to have to lower its ending stocks estimate in future WASDE reports.”

World corn supply estimates

Corn ending stocks came in lower than expected, reduced this month from 288 million metric ton (mmt) to just under 284 mmt.

The 4 mmt is a result of USDA seeing a higher demand estimate for world corn numbers – increasing it 4 mmt.

Hultman said 1.42 bb of corn has been shipped as of April 1.

“That shipment total is up 84% from last year – well above the four year average pace,” he said.

U.S. sales commitment total, so far for corn is 2.262 bb, which is quite close to USDA’s new export estimate of 2.67 bb.

“I think we will continue to see USDA under pressure to raise that export estimate for corn in future reports,” he said. “Still a very bullish looking trend we see in export sales.”

The spot corn price in Chain from their Dalian exchange are still relatively expensive and translated to $10.44 a bushel as of the release of the report.

“It is quite possible there is still a purchase need ahead for China,” he said. “The landscape of China’s prices continue to suggest that even though the demand needs have eased the past few months, they could still be a lucrative market for more export sales before the season’s done.”


For soybeans, the numbers were relatively neutral.

“We did see a higher crop estimate for Brazil, but given the level of demand we are seeing all around the world for this market, especially from China, I don’t think that higher crop estimate is a problem,” said Hultman. “We still have a bullish situation overall we are seeing here in soybeans.”

The U.S. ending stocks for soybeans remain extremely tight, Hultman said at 120 mb.

“Given the strong export pace, we can’t say we have a lot of confidence in the 120 million bushel ending stocks estimate – actually supplies can be on a much tighter path than we realize at the moment.”

The export pace to China has started to level off as China’s buying interest has shifted to Brazil, which is not unusual for this time of year.

“We have had an incredible run so far. Soybeans shipped as of April 1 are up 73% from a year ago,” said Hultman. “We have total sales of 2.23 billion bushels on the books as we speak. USDA’s new export estimate of 2.28 billion bushels isn’t that far away.”

World soybean supply estimates

Hultman said world soybean supply estimates were higher than expected from just under 84 mmt last month up to 87 mmt.

The increase, Hultman said is coming from two places an increase in the crop estimate for Brazil and a reduction in China’s demand estimate.

Brazil’s crop estimate increased from 134 mmt to 136 mmt.

As far as China’s reduction in demand from 116.7 mmt to 114.7 mmt, USDA noted in their text that they see lower crush activity coming from China.

“We would suspect that is from some of the incidents they have had with African Swine Fever they are still contending with in their pork industry,” said Hultman.

Weekly soybean sales to China, Hultman said was off to a very strong start to the early part of the season from July to October period and they remained an active buyer up until February.

“It’s only been in the last month and a half have those new sales really dropped off,” he said, adding the total sales to China, so far are 1.32 bb.

Soybean prices in China remain high, translating on the day of the report to over $17 a bushel.

“The market is holding support. Of course they are making their new purchases in Brazil right now, but it shows how strong their demand continues to be for soybeans in general,” he said.

As with, corn the soybean basis also continues to be very robust with the strongest it has been in eight years.

As of the day of the report, the DTN’s National Soybean Index closed 28 cents below the May contract.

“Normally, we are 60 cents below the futures board this time of year. That is another strong, healthy sign of cash soybean demand,” said Hultman.

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