Dec Chicago corn futures shot up by $0.15 ½ a bushel Tuesday to settle at $4.23 after the USDA’s World Agricultural Outlook Board released its November World Agricultural Supply and Demand Estimates report, dropping its ending stocks estimate to its lowest point in 21 years.
Soybean futures also shot up, setting a new contract high.
The USDA also slashed Ukraine’s 2020 corn crop to 28.5 million tonnes and raised China’s corn import estimate to 13 million tonnes.
But that was just the last straw. Already, the market had been concerned with the derecho’s effect on US production and dryness in South America.
After the derecho swept across the Corn and Soybean belt in August, it was impossible to get a grip on just how badly the storm had hurt the eventual production. There were reports and pictures of flattened fields and destroyed grain bins, but crops seem to have a way of surprising with their resilience to adversity.
CORN PRODUCTION CUT
In fact, some market analysts back in April were talking about one of the largest stocks-to-use ratios in history as the Great Lockdown commenced, and the consumption picture looked bleak. There was talk back then of possible ratios near 30% instead of the 11.5% that was calculated from Tuesday’s report.
The latest WASDE report forecasted US 2020-21 corn production at 14.507 billion bushels, down 215 million, or 1.46%, from the October estimate of 14.722 billion. However, it was 887 million, or 6.51%, higher than the 2019-20 crop estimate of 13.620 billion and the 2018-19 crop of 14.340 billion.
Total use for this corn crop was pegged at 14.825 billion bushels, up 250 million, or 1.72%, from the October estimate of 14.575 billion; up 938 million, or 6.75%, from last year’s estimated 13.887 billion bushels, and up from the 2018-19 total of 14.288 billion.
Total use was broken down into domestic and export use. Domestic use was placed at 12.175 billion bushels, down 75 million, or 0.61%, from the October estimate of 12.250 billion but up 66 million, or 0.55%, from the 2019-20 crop year estimate of 12.109 billion, but down from the 2018-19 total of 12.222 billion.
Expected exports from this crop year came to 2.650 billion bushels, up 325 million, or 14.0%, from the October estimate of 2.325 billion and up 872 million, or 49.0%, from the 2019-20 crop year estimate of 1.778 billion and even up from the 2018-19 crop year total of 2.066 billion.
The expected average farm price from the report was $4.00 a bushel for this crop, but other analysts said that with the stocks-to-use ratio implied in this report, corn could get to $4.75.
CATTLE, BEEF RECAP
Fed cattle trading was done last week at $106 to $107.25 per cwt on a live basis, up $0.75 to $3 from the previous week. Dressed-basis trading was done at $160 to $167 per cwt, steady to up $5.
The USDA choice cutout Tuesday was up $4.86 per cwt at $222.25, while select was up $6.18 at $208.55. The choice/select spread narrowed to $13.70 from $15.02 with 116 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA reported Tuesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.10 to $1.15 per bushel over the Dec CME futures contract, which settled at $4.23 a bushel, up $0.15 1/2.
The CME Feeder Cattle Index for the seven days ended Monday was $135.85 per cwt, up $0.27. This compares with Tuesday’s Nov contract settlement of $140.85 per cwt, down $0.77.