Market Analysis
In a highly usual move, the USDA decided to take a time-out this month when it decided not to change any line in 5 out of the 6 major US grain & soybeans supply/demand reports last Friday. (Only sorghum’s FSI demand was raised 5 million bu. slicing stocks by a similar amount.) Having limited changes on the USDA’s December balance sheets isn’t surprising since only cotton’s output is updated this month. However, given this fall’s strong overseas purchases of US grains and soybeans, some slight adjustments in one crop’s export demand wouldn’t have been surprising either.
In corn, this month’s unchanged US stocks were possibly the one crop where no big change was expected. With talk of a larger January final crop and concerns about the USDA’s feed demand being too high (2015/ 16’s feed demand was sliced 62 million bu. to 5.13 billion in November) waiting until January could even be seen as prudent. However, strong biofuel & overseas demand might compensate for a feed demand drop if the US final crop size declines like 6 out of last 9 years. Currently, 2016/17’sales are 103 million ahead of 5-year seasonal pace to hit the USDA’s 2.225 billion bu. objective & the highest Dec 1 level since 2007/08 crop year.
In soybeans, the recent higher EPA advanced bio-fuel levels for 2017 & 2018 along with strong exports had traders expecting change in either soy’s crush or exports. The USDA did up bean oil’s industrial demand by 250 million lbs, but they also cut its US food demand by 150 million leaving a modest drop in bean oil’s stocks, but no upward change in soybean’s US crush. Hefty fall demand that continue into strong overnight sale of nearly 1.5 mmt last week didn’t prompt a USDA export increase either. Interestingly, this year’s pace is 80 million ahead of the 5-year seasonal and 99 million higher than 2014’s previous record level for Dec 1.
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