Corn Futures Jump on USDA Reports

USDA ( MGN Image )

Today’s USDA reports reversed the day’s trading patterns in corn, increased value in soybeans and softened wheat and cotton futures. Stocks for corn came in lower than expected, soybeans slightly higher.

Per the report, USDA is expecting yield increases compared to 2019 in the 12 top production states. These estimates do not include damages reported this week across parts of the Corn Belt.

“Yeah, the big ticket number here, of course, were the yield numbers for corn and soybeans—both went up and both were a little higher than some trader expected,” says Joe Vaclavik with Standard Grain. “Another point of interest is USDA raised it demand production.”

Demand Drivers

In fact, the demand projection for corn is the second best on record, he adds. “We’ve got some really fantastic demand numbers penciled in.”

The demand numbers could be feasible, too. With recent big sales to China in both corn and soybean commodities trader optimism is there. However, there are always uncertainties.

“It’s very possible that we meet or exceed the numbers that are being projected,” Vaclavik says. “Now in terms of items like soybean crush, a lot of that is going to depend on margins and that could change.

“Ethanol is a big thing that could swing around a lot and I don’t know what the country is going to look like in the next 13 months. If we’re back to normal, back to driving again we could improve the ethanol projection. But if we lockdown we could be too high with the ethanol number. There’s a lot of moving pieces here.”

Production

This year’s production for corn could be a record crop—and soybeans aren’t far behind.

“Do those come to fruition, that’s a big question mark,” Vaclavik says. “Some people would argue that this damage we saw in Iowa on Monday could present some problems and drag down production nationally.”

  • Corn: 15.278 billion bu.
    • 15.000 billion projected in July
  • Soybeans: 4.425 billion bu.
    • 4.135 billion projected in July
  • Cotton: 18.080 million bales
    • 17.500 million bales projected in July
  • All wheat: 1.198 billion bu.
    • 1.218 billion projected in July

Watch more of Joe Vaclavik’s analysis here:

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