Grain market analysts had big hopes for corn, ahead of Thursday’s release of the October World Agricultural Supply and Demand Estimates report. However, the report’s findings were bearish.
The U.S. Department of Agriculture (USDA) lowered corn ending stocks by 200 million bushels in its latest Quarterly Grain Stocks report. Analysts believed the bullish news would bleed over into today’s World Agricultural Supply and Demand Estimates report. However, corn came in “worse than expected.” Greg McBride, commodities broker with Allendale, shares what happened.
“USDA made a downward revision, of 200 million bushels combined, to exports and ethanol, and offset that by about 125 million bushels for feed and residual. Ending stocks came in at 1.929 billion bushels, which is about 140 to 145 million bushels higher than what we were expecting. They also increased yield by two-tenths of a bushel,” McBride said.
“Not all hope is lost for corn,” McBride said. Weather forecasts will provide the next “sense of hope,” helping push corn futures higher.
“Concerns as we move forward are going to be the cold temperatures moving through the Midwest,” McBride said. “Obviously the big snow storm going through the northern Plains and how much damage that is going to do to corn that has not reached full maturity. Then with cold temperatures reaching into Nebraska, Iowa & Illinois, there is going to be concerns about losing some yield.”
Officials made positive revisions to the soybean side of the equation.
“There was a drop of a bushel per acre on yield and a significant drop to ending stocks,” McBride said. “We saw an increase in crush and got our ending stocks to 460 million bushels. If you remember, just a few months ago we were sitting around a billion (bushels). This is the direction we want to see for beans.”
Analysts will continue to monitor trade discussions with China, as a trade agreement between the world’s two largest economies could further bolster the soybean market.