Corn Prices Boosted by USDA Report Reflecting Robust Exports, Ethanol’s Rapid Recovery from COVID-19

USDA’s June World Agricultural Supply and Demand Estimates (WASDE) caused corn prices to hang on to the day’s gains, but spurred soybean prices to tumble Thursday. Prior to the report, the July soybean contract was up 11 cents, but once the report was released, prices took a nosedive, before bouncing back to 8 cents lower just before noon.

USDA painted an optimistic picture for corn in Thursday’s report. The agency reduced both beginning and ending stocks due to increased ethanol use, as well as a boost in corn exports. Those expectations were more than what the trade expected leading into the report.  The agency adjusted old crop ending stocks 150 million bushels lower to 1.107 billion bushels. The new crop estimate is now at 1.357 billion.

BREAKING: According to GasBuddy data, Sunday US gasoline demand easily sets a new post-COVID Sunday record, up 8.9% from the prior Sunday and 7.5% above the average of the last four Sundays. — Patrick De Haan ⛽️? (@GasBuddyGuy) June 7, 2021

USDA says corn used for ethanol increased 75 million bushels, based on updated data from the USDA Grain Crushings report, as well as weekly ethanol usage data which points to ethanol demand almost fully recovered from the impacts of the COVID-19 pandemic.

#corn #exports are too high.#timestamp. — Cornbelt Marketing, Inc. (@SamuelBHudson) June 10, 2021

A big question leading into the report is what USDA would do with Brazil’s corn crop that’s been ravaged by drought this year. USDA did make adjustments, with the new estimate for Brazil's corn crop falling to 98.5 million metric tons, down from 102 mmt last month. However, some analysts say the agency's most recent number is far from what private estimates are currently showing.

Brazil #corn production falls to 98.5 mmt, down from 102 mmt last month. Trade expected 97.32 mmt. Our final estimate is currently at 89.68 mmt. #oatt — Arlan Suderman (@ArlanFF101) June 10, 2021

"Our Stone X producer survey that we conducted around the first of June lowered its total Brazil corn production estimate to 89.7 million metric tons, down from 100.5 million metric tons of previous month," says Arlan Suderman of StoneX Group. "Those adjustments are going to take time [for USDA to make]. But that means either increased wheat feeding, decreased corn feeding, or increased dependence on U.S. exports, and probably a combination of those in the months ahead."

Soybeans Slip

The agency showed higher beginning and ending stocks for the 2021/2022 crop, with USDA forecasting a lower crush for old crop and higher soybean meal imports. USDA reduced the crush by 15 million bushels, to 2.175 billion. The agency also cut soybean oil exports by 400 million pounds.  

The agency says with higher soybean beginning stocks and no use changes for the new crop, ending stocks are projected at 155 million bushels, up 15 million from last month.

Much of the Midwest “will experience a net decline in soil moisture over the next 10 days to possibly 2 weeks,” @worldwx said today. #pfnews — Pro Farmer (@profarmer) June 10, 2021

As traders await USDA's updated look at acreage at the end of the month, weather continues to dominate headlines. Pro Farmer reported Drew Lerner of World Weather says the next 10 days to two weeks isn't showing a lot of promise for moisture in areas that need it. Lerner says the Midwest "will experience a net decline in soil moisture over the next 10 days to possibly 2 weeks."

Update on the massive "heat dome" building over the United States Southwest. ?

The dreaded 6000-meter 500-hPa height contour has appeared in the +6 day forecast over the 4-corners.

This ridge will cause temperatures to skyrocket -- especially with bone dry surfaces. ?️ pic.twitter.com/FV7sDhYISl — Ryan Maue (@RyanMaue) June 10, 2021

Meteorologists say a ridge will bring some serious heat to areas of the country over the next several days. That's as the latest drought monitor showed overall conditions worsening across the country last week, with extreme levels of drought crawling further south in North Dakota. 

A year over year comparison of the drought shows just how much the situation as changed, with dryness become more widespread and much more intense.