Will Monday's USDA Report Loosen More Corn?

February 7, 2014 01:16 AM
Will Monday's USDA Report Loosen More Corn?

Look for Brazil’s soybean crop to get larger and feed use of corn to hold. Those will likely be the highlights of USDA’s World Agricultural Supply and Demand Estimates, released Monday, Feb. 10.

"Usually feed numbers are changed after the quarterly grain stocks reports," says Rich Nelson, director of research for Allendale, a brokerage services firm in McHenry, Ill. "USDA adjusted feed use in January by increasing it 100 million bushels. Feed use will be on hold until the April report."

In the January WASDE report, USDA put first-quarter 2013-14 feed use 17% above the previous-year’s first quarter and full-year feed use at 5.3 billion bushels, up 22% from 2012-13. Allendale calls USDA’s recent feed use estimate "unrealistic" but doesn’t expect changes in Monday’s report.

Combined beef, dairy and pig numbers are lower than a year ago, but feed use still will be higher this year than last for a couple of reasons.

"DDGs are being exported leaving a smaller domestic supply, and there’s a shift from feeding wheat into feeding corn," says Nelson. "But does a smaller supply of DDGs and less wheat feeding really mean a 22% increase in feed use for 2014?"

Allendale expects USDA to increase corn exports by 50 million bushels and to lower corn used in ethanol by 50 million bushels.

Average trade estimates call for a lower 2013-14 corn carryout, but ending stocks are still large. The average trade estimate for corn ending stocks came in at 1.619 billion bushels and ranged from 1.574 billion to 1.748 billion, compared with USDA’s latest estimate of 1.631 billion bushels.


Allendale expects USDA to raise soybean exports and lower ending stocks for soybeans. The brokerage firm pegs ending stocks of soybeans at 135 million bushels, compared with USDA’s previous forecast of 150 million bushels.

The average trade estimate for 2013-14 soybean ending stocks is 143 million bushels, with a range of estimates from 125 million to 164 million.

Southern Hemisphere

"This is a very minor report in the big picture," says Nelson. The South American crops will be a major focus.

Allendale pegs Argentina’s corn production at 24.5 million metric tons, compared with USDA’s previous estimate of 25 million metric tons. The firm expects USDA to leave Brazil’s corn output unchanged at 70 million metric tons.

The average trade estimate for Argentina’s corn production is 23.82 million metric tons. The trade expects corn production in Brazil of 77.99 million metric tons.

As for soybean production, Allendale puts Argentina’s output at 54 million metric tons, 500,000 metric tons lower than USDA’s previous forecast, but expects Brazil’s crop to rise to 90.5 million metric tons, up from USDA’s latest estimate of 89 million metric tons.

The average trade estimate for Argentina’s soybean production is 54.13 million metric tons, while the trade expects Brazil’s output to hit 89.76 million metric tons.

The bigger question regarding Monday’s release of February’s WASDE report is whether a potential post-report rally will convince producers to sell, says Nelson. Producers have been waiting for stronger prices before marketing their crops, but corn is starting to loosen up, he adds.

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