USDA Report - 2/9/16


This morning's report came out with a lack of enthusiasm as often is the case with the February report. Typically, the January reports try to straighten out US grain numbers from the fall, and it's usually not until the March reports that we see the big changes in South American production numbers, so February is often met with a bit of skepticism and often debate between the pundits as they argue with the USDA numbers for another month. Going into the report, the expectations were that US exports were lagging behind current objectives, and there still weren't any big changes to the South American crops yet to warrant concern. Ethanol grind has been fairly steady despite falling margins, and soybean crushers have been facing decreasing returns on their margins as well over the last year. Barge freight has continued its freefall and many values remain well below tie-off. US Gulf values still remain above other competitors in both corn and beans.

Today's report did increase the corn carryout: 2015/16 c/o is up to 1.837 billion bushels from the 1.802 reported in January. The USDA is now showing corn exports at 1.650 bbu, compared with their previous goal of 1.7 bbu. Coupled with an increase of 10 million bushels of imports, there was potential for 60 million bushels to be added to the balance sheet. A 25 mbu increase in ethanol grind managed to cull that loss of demand, and the net result was the 35 mbu increase to the balance sheet.

World corn production was also found to be higher, as world production was up to 970.1 MMT, however the world ending stocks were reported 100k MT lower at 208.8 vs 208.9 in January. Reportedly, China happens to be sitting on what we think is 111.5 MMT, or 53%, of those world stocks.

Soybeans also saw carryout increase: up 10 to 450 mbu. While the USDA did not adjust the export number down like many thought they would, they did lower soybean crush by 10 mbu, and passed that on to next year's carry-in. While an extra 10 mbu doesn't do too much to the balance sheet, the big number came from world soybean production and stocks, as both of those are higher YoY. World soybean production is seen to be 320.5 MMT, up from last year's 318.8, and stocks are at 80.4 MMT, up one million from last month and 3+ million from last year.

Both sorghum and wheat saw increases YoY, as well, with Chinese demand for sorghum falling off lately and the continual building of world wheat stocks. Sorghum c/o was unchanged from last month, but still at a hefty 65 mbu, and wheat stocks were up from last month's 941 mbu to 966 mbu. World wheat stocks were up to 238.9 MMT, almost 7 MMT higher than reported last month and 24.4 MMT higher than last year - an increase of almost 900 mbu. Those numbers are worrisome as they will work into corn demand going forward, something to keep an eye out in the coming months as corn prices continue to slip, making these other 2 alternatives viable options for some.




Disclaimer: This commentary does not represent the views of Tremont Cooperative Grain Company, but rather one author's opinions. Data used in this commentary is taken from sources believed to be accurate, and is intended for informational purposes only and should not be solely used to conduct any type of trading strategy. For more information, please contact Tremont Cooperative Grain Company at 309-925-4981, or email