USDA Beats Dead Horse

The January WASDE and Quarterly Stocks Report was released today, and it put what may be the final nail in the coffin for 2023-24 grain bulls.

Production estimates of both corn and soybeans for the 2023 crop year were raised between .5 percent and one percent in total, which doesn’t sound like much, but it allows for the projected 2023-24 ending stocks of corn to remain comfortably above two billion bushels at 2.162 billion. A plentiful supply that will take time for demand to chew through. Demand has been good … ish, with better export sales to Mexico than last year and consumption from an ethanol market that has been running at top-end for both total production and positive profit margins when taking the previous year into account. However, ethanol margins and demand have taken a hit in the last month, partially due to seasonal tendencies and the first bout of cold weather but it’s not a given or even an expectation that returns will be the same as last year.

March corn futures are down $0.24 since the start of the year, settling at $4.47/bu today.

Projected 2023-24 soybean ending stocks were raised from 245 million bushels to 280 million bushels. Still a tight-enough number that could be swallowed by an increase in demand from surprise Chinese purchases. But with the weather straightening out in South America recently and offers for soybeans originating south of the equator crumbling in price the last two weeks, if there is a “surprise” from China it would be more likely cancelations of previous purchases from the U.S.

March Soybean futures are down $0.73 since the start of the year, settling at $12.25/bu today.

The only comfort for grain bulls is that prices are technically very oversold in both the corn and soybean markets and due for a bounce. That and the markets are closed for an extra day this weekend due to Martin Luther King Jr. Day.

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