USDA slashes corn, soy supply view on South American crop troubles

CBOT July corn last down 5 cents at $4.26-1/4 per bushel.

According to the USDA Crop Progress Report for last week, the majority of corn and soybean crops have emerged.

CBOT July soft red winter wheat settled up 10-1/4 cents at $5.07-1/2 a bushel.

In its monthly supply and demand report, the government cut its new-crop and old-crop ending stocks outlooks for both corn and soybeans by more than analysts had forecast.

That’s up 3 points from last week – 1 point better than previous year. The country is among the world’s top suppliers of corn and soybeans, and prices for both crops have rallied in recent weeks amid output concerns. The USDA projected world and US inventories that were smaller than analyst projections after the dry weather in Brazil and flooding in Argentina, forecasting an eighth straight gain in global consumption.

“People thought South American corn and soybean yields were basically in the bag”, said Mr. Marshall, adding that for soybean traders, “there’s way more upside potential than downside risk if we have any kind of a weather hiccup” in the USA this year. The U.S. corn export projection for 2016/’17 was raised 50 million bushels as U.S. supplies were expected to remain more competitive in 2016/’17 with less production for Brazil.

“The corn crop’s condition improved from last week and is now rated five percent very poor to poor, 19 percent fair and 76 percent good to excellent”.

The USDA forecast domestic soybean stockpiles at the end of August 2017 would total 260 million bushels, down from estimated inventories of 370 million bushels in 2015-16. Global corn reserves will be 206.5 million tons, topping the 205.5 million estimate.

The rally was initially fueled by diminished crop potential in Argentina following heavy rains although dealers said the situation in the world’s third biggest producer was stabilizing. That helped push the average soybean cash-price estimate up to $9.50 a bushel, from $9.10 in the May report. Seasonal pressure from early phases of U.S. winter wheat harvest also weighed, as growers continued to gather crops in southern portions of the U.S. Plains. July soybeans on the Chicago Board of Trade were up 0.3 percent at $11.79-3/4 per bushel at 12:30 p.m. CST (1730 GMT), and reached the highest price for a most-active contract since June 2014.

-U.S. 2015/2016 rice ending stocks are lowered 500,000 hundredweight to 42.9 million cwt on a 1-million-ton increase in exports.