USDA Lowers US Soybean Supply
Increase in ethanol demand appears suspect
USDA WASDE: Bullish Soybeans, Neutral Corn
On Tuesday, Feb. 11th, the USDA released the February WASDE report.
Corn: Neutral. USDA keeps ending stocks at 1.89 billion bushes (BBU).
USDA raises ethanol demand by 50 million bushels (MBU) and lowers exports by 50 MBU.
Pre-report ending stocks estimate: 1.864 BBU
FBN’s Take On What It Means: We believe that the USDA’s cutting 50 MBU of corn exports aligns with the government’s data but the increase in ethanol demand appears suspect.
Soybeans: Bullish. USDA lowers the ending stocks by 50 MBU on raised export demand.
USDA raises Brazil soybean production to a record 125 MMT, 4.9 BBU. This figure is 1.5 BBU larger than the US soybean crop.
Pre-report ending stocks estimate: 443 MBU
FBN’s Take On What It Means: We believe that the USDA’s outlook on soybeans is curiously optimistic and predicated on enhanced Chinese export business that according to the USDA’s own data has yet to materialize.
Wheat: Neutral. USDA raises export demand by 25 MBU. USDA raises HRS export demand by 15MBU and incrementally raises HRW and white wheat exports.
USDA makes no changes to Russia and Argentina exports, raises EU exports and lowers Canada. USDA raises Chinese wheat imports.
Pre-report ending stocks estimate: 954 MBU
FBN’s Take On What It Means: We believe that the increase in the US all wheat exports can correspond with the decline in Canadian exports. Ultimately the by class adjustments are incremental and immaterial.
Brazil Corn Acres Higher from January
On Tuesday, Feb. 11th, Brazil’s statistical agency, CONAB, released their revised crop statistics for the 2019/20 corn and soybean crops.
CONAB raised total planted corn acres by 500,000 hectares to 17.991 total planted corn acres.
CONAB raised Brazil’s second crop corn, Safrinha, acres from the beginning of January to 13.230 million hectares (MH) vs. 12.878 in 2018/19.
Total Brazilian corn production is estimated at 100.486 million metric tonnes (MMT), 3.95 billion bushels (BBU).
Last year Brazil’s corn crop was 100.043 MMT, or 3.93 BBU.
CONAB is estimating that Brazil will harvest 123.250 MMT, 4.8 billion bushels of soybeans.
If realized, Brazil’s soybean production would be a record harvest.
FBN’s Take On What It Means For The Farmer: We believe that CONAB’s estimated production increases are not a complete surprise to the market but can be a negative for the US soybean and corn export programs.
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