USDA Cuts Corn and Soy Production More Than Expected

Note: Trade expectations are sourced from Bloomberg.

Trade Reaction

Naomi Blohm, senior market advisor, Total Farm Marketing: “Lower-than-expected yield and production for corn and soybeans sent futures prices soaring. With corn ending stocks now pegged at 1.54 billion bushels, old-crop corn futures should likely nestle into a new trading range of $4.60–$4.85. New-crop corn … struggles to trade above $4.50 on the idea of higher production ahead. U.S. soybean ending stocks are now pegged at 380 million bushels, down from 470 million bushels last month because of the lower production. There were no changes to demand for soybeans on this report. Global ending stocks for soybeans, while slightly smaller due to smaller U.S. production, are still record large. The funds — already long — have been hinting at a friendly corn market. Today’s USDA reports solidify the sentiment.Looking forward, traders will quickly shift focus to the higher U.S. dollar making U.S. exports less competitive, South American weather, the new presidential administration’s potential tariffs and trade wars, along with eager anticipation of what the new administration will do with U.S. biofuel mandates.”

Jeremy McCann, account manager, Farmer’s Keeper: “The USDA surprised the trade today…. The only ones who may not be surprised are producers themselves, who had a very rough end (and start in most cases) to the growing season. Since the export program picked up its pace this past fall, basis has soared. And with an even more reduced carryout to 1.540 billion bushels, we should see continued strength for old-crop corn…. Overall, the trade was expecting a bullish report, and the USDA delivered on that and even then some. I would not expect this bullish sentiment to change until tariff talks regain control of the market.”