The world will have plenty of grain and oilseeds this year due to large crops in the United States, South America and Europe.
USDA on Tuesday raised its estimates for U.S. and global ending stocks for corn and wheat from its March report. It lowered U.S. soybean stocks but raised global stocks. The changes were largely as expected but reinforced ideas there will be enough crops to eat, feed, process and export.
“The numbers for corn and wheat reflect changes stemming from the March 31 Grain Stocks reports. The numbers in the U.S. and global tables were largely as expected but reinforce opinions that the world has plenty of grain and oilseeds.” said Bryce Knorr, Farm Futures senior grain analyst.
Corn and soybean futures in Chicago dropped about 5 cents a bushel after the reports, but both markets stayed higher for the day. Wheat futures lost 3 to 4 cents after the report but also remain higher for the day.
“USDA cut 10 million bushels off of wheat exports, and they could get worse, too,” said Knorr. “The report makes it clear that there’s still too much old crop wheat around.”
U.S. corn ending stocks came in at 1.862 billion versus the March estimate of 1.837 billion, soybeans at 445 million versus 460 million and wheat at 976 million versus 966 million.
“For corn, the big question on old crop is whether exports will come in less than USDA currently forecasts (1.65 billion bushels). Unless shipments are very strong the rest of the spring and summer, that will be the case," said Knorr. “The U.S. will also be competing with South America for the world market, though the size of the crop there bears watching. Dry weather is hitting Brazil’s big second crop sooner than normal.”
USDA raised Argentina’ s corn production to 28 million metric tons from the March report, but left Brazil’s unchanged at 84 million.
“Corn production is raised 1 million tons in Argentina as timely rain during February and March was beneficial following some dryness and heat during January,” USDA said.
World stocks of corn, soybeans and wheat were raised with bigger crops in Argentina contributing to all three increases. USDA left Brazil’s soybeans unchanged at 100 million tons, but raised Europe’s wheat crop to 160 million tons from March’s 158.46 million.
“The bottom line from these reports is the overall bearishness of old crop supplies. Rallies depend on growing season weather, plain and simple,” said Knorr. “Soybeans are getting a lift from outside markets, but that money could dry up quickly, especially if OPEC can’t agree to limits on crude oil production at its meeting Sunday.”