Despite the 2019 harvest being in the silos, it continues to grow in size. That is what the USDA Department of Agriculture estimates in their Wasde report for April. Less processing of maize, soy and wheat means that higher closing stocks are expected.
Despite the 'bearish' news, prices on the CBoT futures market in Chicago all closed higher, after an initial negative shock reaction. The market did find some small surprises and bright spots in the Wasde report for April.
Higher inventories in US and worldwide
Inventories continue to grow because sales are lower. For corn, the USDA adjusted its ending inventory for the 2019 crop from 1,89 to 2,09 billion bushels. This is virtually the same as what market analysts had estimated. Soy increases from 425 to 480 million bushels and wheat goes from 940 to 970 million bushels.
The USDA also calculates that more grains will be in stock on the world market at the end of this marketing season. It adjusts the figures for wheat upwards. From 287 million tons to almost 293 million tons. Despite a run on wheat due to the COVID-19 outbreak, there remains sufficient world supply. Corn on the world market has been adjusted from 297 to 303 million tons and soy is the only one that is lower. A stock of 102,44 million tons drops to 100,5 million tons.
South America
It is striking that the Americans expect fewer soybeans from South America. The Brazilian soy harvest is estimated to be 1,5 million tons lower and that of Argentina 2 million tons. A bright spot for traders. The corn harvest is also estimated to be lower in that country.
One of the important reasons for adjusting the closing stocks upwards is the significantly lower processing into ethanol for grain corn (-375 million bushels). That market has suffered significant damage. The demand for animal feed is increasing according to the ministry. Corn from the US is low priced, which means that exports and consumption are positive. The processing of soya has also been very good. Market analysts had already collected these figures themselves, so the report contains few surprises. This results in a positive tone on the CME futures market in Chicago.
New export opportunities
The report for May discusses the acreage figures, just like the previous report from March. So all attention is now focused on the weather this spring. Can sowing be done on time and what is the crop growth like? In the northern states, where the autumn was very wet, it is mainly coffee grounds. For example, North Dakota still has 20% of the corn in the country. What choices do farmers make there?
At the same time, the Americans hope that their export engine will continue to run. Corn exports are continuing well and hiccups in South America are giving the country new opportunities, now that China is clearly on the market.