Many estimates for the January WASDE said that it would likely be a rather uneventful report, but the USDA loves to prove us wrong, and they did that by making cuts to both the corn and soybean numbers, while leaving the South American crop unchanged. Allendale commodity broker Greg McBride said this news is very bullish for the corn markets.
“Lowered corn yield by 3.8 bushels to the acre. It brought us down to 179.3. That brings your production down by 276 million bushels overall. There were changes to to the demand or to the usage side of things on the corn balance sheet, they did decrease feed and residual by 50 million bushels, and they decreased exports by 25 million bushels. Back in December, they had actually raised exports by 150 million bushels. So this is a little bit of interesting, that you do see these big changes to production, but you also see some some bearish changes to the to the usage side of things, overall. It does bring our pending stock down to 1.5 4 billion for corn, and that is a that is a bullish outlook at this point for that corn market.”
With no changes to the South American crop, Brazil and Argentina are projected to have massive supplies for both of their crops. McBride said it’ll be interesting to see how that continues to impact the US grain prices.
“What does it look like with no changes to South American production at this point and a record overall production expected between Brazil and Argentina? We already know that the price of beans is lower in Brazil than it is here, but the price of corn is still holding holding firm on the on the US side of things, even though we know that that’s going to shift over the next month.”
Soybeans also received very bullish news, but McBride said both marketplaces are facing uncertainty with the news about the South American crop and the potential for tariffs and trade wars with the new administration.
“We did see decreases again to yield one bushel per acre lower. You did see a harvested acres coming down by 200,000 so overall, your total production comes down by 95 million bushels. No changes to your usage on beans. So overall, just a 90 million bushel decrease. So all of a sudden we’re talking about 380 million bushel ending stocks on on soybeans. This is again, a bullish outlook for us. This is something that we’ve got to keep an eye on. But the big questions remain, as I said, with the corn, it’s South American production, and then we do have to concern ourselves with risk to prices based off of any tariffs coming in with the new presidency and potential trade wars.”