Corn production increases offset by harvested acre reductions provided a relatively neutral World Agricultural Supply and Demand Estimates report Friday, giving grain traders a sense of relief.
USDA officials raised corn production to 13.69 billion bushels, a slight bump from the December 2019 projection of 13.66 billion.
Allendale broker Nathan Cardwell said after a late harvest such as what was seen in 2019, it’s not uncommon to see USDA raise production.
“History seems to repeat itself,” Cardwell said. “Each year, like ‘85, ‘92, ‘08, and ’09 ... USDA raised production between November and January.”
Cardwell said USDA “didn’t let traders down” as most analysts expected the increase in production.
But USDA offset production numbers with a decrease in harvested acres. The Department projected harvested corn acres at 81.5 million, down 300,000 acres from the 81.8 million-acre estimate in December. Corn ending stocks dropped to 1.89 billion bushels from last month’s projection of 1.91 billion bushels.
Statisticians lowered soybean harvested acre projections to 75 million acres this month, a 600,000-acre drop. Soybean production totaled 3.558 billion bushels, a slight increase over the 3.55 billion December estimate. Ending stocks were maintained from last month at 475 million bushels.
“I think this report itself, is a big report that answers a lot of questions that everybody has been looking for,” Cardwell remarked.
He added the markets “took a deep sigh of relief” with the somewhat neutral report.
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USDA’s National Agricultural Statistics Service also released the Quarterly Grains Stocks report, which came in below traders’ expectations for corn and wheat.
The department pegged corn stocks as of Dec. 1 at 11.38 billion bushels compared to traders’ expectations of 11.47 billion.
Wheat stocks projections as of Dec. 1 came in at 1.83 billion bushels; the average trade guess was 1.91 billion bushels.
Winter wheat seedings are down 355,000 from last year, which caused wheat to trade higher at midday, Cardwell said.
Soybeans stocks as of December 1, are projected at 3.25 billion bushels compared to traders’ expectations of 3.19 billion.
Grain traders will now turn their attention to South American weather and the "phase one" trade deal signing between the U.S. and China set to take place next Wednesday.
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