USDA’s November WASDE caused a bullish surprise, as ending stocks for US corn and soybeans came in well below average analyst estimates. The downward adjustment to ending stocks, to their lowest levels in seven years, was due to higher demand from China. Gro has been writing for months that Chinese corn demand has been underestimated by the USDA.
CBOT December corn futures settled up 3.6% today while front month soybean futures rose 3.3%.
The USDA pegged 2020/21 corn ending stocks at 43.2 million tonnes (1.702 billion bushels), down more than 20% from its October estimate of 55.0 million tonnes. US corn export demand was raised to a record high of 67.3 million tonnes (2.650 billion bushels), up 14% from the previous month. The sharp revisions stem directly from the USDA’s near-doubling of China’s corn imports to 13 million tonnes. Gro expects even higher levels of Chinese corn imports based on the country's tight supplies and rapidly growing hog herd. Also contributing to higher US corn export demand are production declines in Ukraine, the No. 1 corn exporter to China.
On supply, the USDA pegged US corn yield at 11.0 tonnes/hectare (175.8 bushels/acre), down from 11.2 tonnes/hectare, a drop that was four times greater than market expectations. The decline in US national yield was driven by decreases out of North Dakota, Michigan, Kansas, Ohio, and Illinois. While the reduced estimate for corn supply surprised the trade, it was the increase in demand that captured the most attention.
In soybeans, the USDA estimated ending stocks at 5.2 million tonnes (190 million bushels), down 2.7 million tonnes (100 million bushels) from the October WASDE estimate. Unlike corn, it was the anticipated drop in supply that was behind the decline in soy ending stocks. The US national soybean yield estimate was lowered to 3.4 tonnes/hectare (50.7 bu/ac) from 3.5 tonnes/hectare (51.9 bu/ac) in October, reflecting a weaker outlook for all top 10 soybean growing states. The USDA didn’t make any adjustments to soybean production in Brazil, the world’s No. 1 soy producer, keeping estimates unchanged at 133 million tonnes. Argentina soy production estimates fell by 2.5 million tonnes to 51 million tonnes. The USDA’s yield estimate now matches the Gro Argentina Soybean Model estimate.
But harvest in both Brazil and Argentina is still far off, and South America’s growing season bears watching closely, especially in a year when China’s appetite for feed grain is disrupting corn and soybean balance sheets worldwide.and drought brought on by La Niña is hurting yields across the region. Gro’s suite of South America Corn and Soybean Yield Models provide daily, in-season forecasts at the district level across the largest corn and soybean producing states.
Gro Intelligence will be hosting a webinar on Thursday, November 19, diving deeper into its South American yield models and exploring what the region’s growing season will look like this year. You can register for the webinar here.