Market Analysis
The USDA continued its recent trend of unexpected changes on their monthly reports. This time it was a dramatic jump in US corn demand of 225 million bu. after the Ag Department upped corn’s demand by 125 million last month. This year’s La Nina induced drought in Argentina has prompted the USDA to cut this major competitor’s output for the 2nd month in a row by 3 mmt to 36 mmt was the major factor behind this month’s stronger exports. Interestingly, the USDA didn’t change their Brazilian crop sizes much. They upped beans by 1 mmt to 113 mmt and shaved corn by 500,000 tons to 94.5 mmt because of 100,000 less hectares of Brazilian plantings.
The other factor behind the USDA’s big jump in US corn exports was a late-season decline in Brazil’s shipments. This decrease their old-corn exports by 2.3 mmt in the just concluded marketing year. Add this amount to Argentina’s 2.5 mmt reduced exports and a 2% stronger US ethanol grind, a 225 million bu. increase in corn demand doesn’t seem unreasonable. With no drought-breaking storms in Argentina’s 10-day forecast and Brazil’s northern safrina corn plantings just winding up, S. America’s output will remain fluid near-term.
In soybeans, the World Board cut Argentina’s bean crop from 54 to 47 mmt this month. However, they only sliced their crush 680,000 tons and upped Brazil’s exports and decreased Argentina’s hefty stocks by 3.8 mmt to 31.2 mmt. Last week’s dramatic 2.5 mmt jump in US soybean sales may have tempered the USDA’s cut in its export forecast to just 35 million bu. but further Argentine crop damage will be needed to decrease the US ending stocks that rose 25 million to 555 million bu. this month.
Despite the ongoing S. Plains drought, lackluster US wheat exports prompted this month’s 25 million bu. cut in old-crop demand. US & Black Sea weather remains wheat’s primary price factor for the next month.
