USDA February 11th, 2020

Yesterday the USDA updated it’s crop report with ending stocks.

There were little surprises to the market.

From Mid-Co, here is a summary:

Corn Ending Stocks were 1.892 MMT which are unchanged from January but higher than the trade estimates.

I think for our marketing – we know that the US has had harvest challenges with some crop unharvested, and maybe questionable quality.  However based on these inventory levels, it doesn’t matter.  Spring is upon us and barring some unseen weather event the focus is going to be on planting, in my opinion.

For Ontario – the corn crop was overall decent but not great.  On top of that, there are large areas where the discussion was grade 4 or under test weight. The good areas were only just grade 2.  That means higher corn usage, more fines, and generally farmers will discover they have less in inventory here in Ontario than they thought.

This should generate some support to the basis but noone can predict it.

Soybean ending stocks were 0.425 MMT vs 0.475 MMT in January.  This number is also lower than the trade estimates.  While this should be positive news for soybeans, the world soybean carryover increased by a large 2 MMT, which puts a damper on things.

The continuing issues with China (Swine Flu, Coronavirus etc) is weakening soybean demand and until this changes I don’t expect much out of the soybean market.

That being said, everywhere I read, the US farmer (and to some degree the Ontario Farmer) is going to plant corn on every flat surface from here to California.  Soybeans are going to have to do something to maintain acreage, as we are seeing a market premium for corn.  For example the current spread is 2.3x the price of corn which I feel is too low.

Wheat ending stocks are more positive, with 0.94MMT vs. 0.965 in January, again surpassing trade estimates.  Also, world stocks are also flat.

The numbers are promising for wheat if March doesn’t kill it off first.