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February 2020 USDA Supply & Demand

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Today’s USDA Supply & Demand report contained no major adjustments to domestic or global balance sheets, in line with what most analysts expected. With a lack of new bullish fundamental information, feed grain markets resumed their slide lower following the release. Soybeans drifted from positive to negative as traders digest a bigger crop out of Brazil.

Most of the grains we follow are either currently in or freshly out of Buy Signals. We are happy for the sales we made on the last round of Sell Signals and urge subscribers to wait for the next round of Sell Signals to make sales.

This report did little to shift the fundamental situation we’ve known about since January. Traders will now turn to the February Ag Outlook Forum for our first look at new crop balance sheets according to the USDA.

You can read our break-down of the February report numbers below:

U.S. corn exports were lowered 50 million bushels, but the reduction was offset by a 50 million bushel increase in corn used for ethanol, leaving 2019/20 ending stocks unchanged from last month at 1.892 billion bushels. This was bigger than the average trade expectation of 1.864 billion bushels.

U.S. soybean exports were increased 50 million bushels, with the USDA citing increased business from China as the cause. With no supply-side changes and no adjustment to soybean crush, ending stocks were reduced 50 million bushels to 0.425 billion bushels, reflecting the increase in exports. Trade expectations were looking for a slightly larger 0.443 billion bushel carryout.

U.S. wheat exports were also increased, with the USDA citing growing competitiveness in the global market. The 25 million bushel increase in exports led to a corresponding decrease in ending stocks to 0.940 billion bushels. This is a five-year low U.S. wheat carryout and slightly below the average trade guess of 0.954 billion bushels.

World corn production was raised 0.8 million tons as a result of increases in South Africa, Moldova, and Ukraine. Increases in corn exports from South Africa, Ukraine, and the EU largely offset reductions in U.S. corn exports.

Global corn ending stocks were down 1.0 million tons to 296.8, mostly reflecting reductions in Vietnam, Brazil, Paraguay, and the EU. This is slightly smaller than the average trade expectation of 297.19 million tons.

World soybean carryout was increased 2.2 million tons from last month to 98.86 million tons, reflecting increases in China and Brazil ending stocks. The average trade guess was for 96.90 million tons.

World wheat supplies were fractionally lower on small changes to beginning stocks and production. Global ending stocks fell 0.05 million tons from last month to 288.03 slightly larger than trade expectations looking for 287.44 million tons. The USDA also made note of several historical revisions reflecting updated export data.

Corn & soybean production was left unchanged from last month for Argentina. The USDA left their Brazil corn estimate unchanged but followed in line with many private analysts in increasing their expectation for Brazil’s bean crop. The increase of 2 million tons to 125 million tons was bigger than traders were expecting. They specifically referenced favorable weather in Mato Grosso and improved rainfall in southern and northeastern soybean areas.

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These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. This commentary is written as a daily marketing tool to help farmers sell the grain they raise. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Past performance and testimonials are not necessarily indicative of future results. Commodity trading involves the risk of loss, and you should fully understand those risks before trading.