In the wake of USDA’s big reports, first-glance impressions are:
Soybeans. Implications for the soybean stocks figure on Q2 residual use is fairly small and most are leaving the soybean residual component of the balance sheet in the 39-to-40-million-bushel range, matching USDA’s March WASDE number. The impact from the report on carry-out is negligible and the trade will continue to monitor exports and crush to see if adjustments to the current 380 mbu soybean ending stocks are warranted.
Corn. The March WASDE was using a feed/residual forecast of 5.775 billion bushels, 30 million less than the 2023-24 total. Disappearance during Q1 2024-25 was about 145 million bushels lower at 2.34 billion, suggesting a December-August total of around 3.34 bbu, or 175 mbu more than in 2023-24. This could have been supported by slightly more Grain Consuming Animal Units in 2024-25 (up 400 thousand, or 0.4% to 100.7 million units) along with forecasts for corn to fall 20 cents per bushel.
However, strong export demand and limited producer selling during the Q2 led to corn prices running about 40-50 cents per bushel more than last year. At the same time soybean meal futures were declining for most of the period and averaged $60-$65 per short ton less than in 2024. As a result, domestic soybean meal consumption at least for the first two months of Q2 is up more than 10% year-to-year and apparently replacing some corn in the feed rations.
The net result was an estimated Q2 feed/residual figure that was 35-40 million bushels less than last year, which should suggest a March-August total which is little changed, or perhaps about 20-25 million bushels less this year. We continue to use a 5.6 bbu annual feed/residual estimate which is 150 million less than USDA and an export forecast which is 100 million bushels larger at 2.55 billion bushels.
Corn export demand continues to look very promising for the remainder of 2024-25, mostly due to a sharply lower exportable surplus in Ukraine (about 250 mbu less this year) as well as the fact that Brazil’s safrinha, or second-crop corn, is facing significant dryness over 20-30% of the area and domestic demand is strong for feed and exceptionally strong for ethanol production.
Soybeans stocks are snug
The March corn and soybean acreage figures in conjunction with the Outlook Forum’s demand assumptions point to a near-2.2-billion-bushel corn carry-out for 25-26 and ending soybean stocks of just under 300 million bushels. The USDA is using a 181.0 bpa yield assumption for corn and 52.5 for soybeans. Both would be records if realized and it may be useful to keep in mind corn yields have averaged 176.6 bpa the past 3 years (or a 380 million smaller crop) and soybeans, 51.3. The latter yield with no change in soybean demand would reduce carry-out from 296 to 196 which is rather snug if the Outlook Forum’s demand estimates were to be realized.
Three takeaways
- Corn and soybean stocks reports were neutral. The former confirmed trade thinking that feed/residual use is likely over-stated but this likely will be offset by larger exports. The soybean stocks report should have no bearing on carry-out.
- Export demand remains an uncertainty. The new crop outlook is clouded by the ongoing lack of clarity on tariff policy and implications for exports.
- USDA yield assumptions for both corn and soybeans seem optimistic in view of recent history.
For more insights and personalized advice, consider consulting with a professional risk advisor. Their expertise can guide you through these volatile times, ensuring that your marketing strategies are both effective and resilient. With the right plan in place, farmers can navigate the uncertainties of the market and make informed decisions that support their financial success.
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