The biggest thing that jumps off the page in today’s report is world corn carryout at 307.5 million tons which looks like a typo compared to the market expecting a level around 159.3 million tons. The answer is China who recently went back and raised production estimates going back 10 years. Since government stocks are a closely guarded government secret, the market was immediately suspicious of what angle they were trying to work. There was sufficient on this report to pull corn lower momentarily but could not keep it down all day. Even with the huge revision, they also revised last years so we can all still agree that corn stocks, both domestically and globally, are lower year over year. Wheat world and domestic stocks are also being drawn down and soybean stocks are building in the world and in the US.
As expected, USDA lowered corn and soybean yield. On corn they made a few adjustments to usage and exports but still lowered domestic carryout from the October report. On soybeans they made significant cuts to exports reflecting lack of progress on trade with China. This leaves a big projected building of US stocks. The change in bean carryout pushed beans to trade lower for much of the day after the report was released. They traded as much as 13 cents lower but were able to recover most of the losses by the end of the day.
All in all this report did not give us the spark we wanted to send the board racing higher. However we did get further validation that the corn crop is getting smaller and demand is strong. Be watching for March corn to approach $4 on the board and new crop approaching $4.15-4.20 (currently at 3.86 and 4.05 respectively) Wheat crop also continues to get smaller and all we need is a spark of a weather headline somewhere in the world to send the funds heading toward the door. New crop is around $5.50 and will not take much to get it over $6. Soybeans will go back to trading news. We will see rallies in quick bursts on positive trade news. Be ready to sell beans over $9 old crop.
