Weekly US grain market review: global markets begin to rally

Despite a marked drop in grain futures predictions at the start of the week, global stock markets now begin to rally as the coronavirus media storm dies down.
calendar icon 6 February 2020
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The grain traders’ perspective

The grain futures market bulls have been squelched recently by the coronavirus outbreak in China prompting fears regarding Chinese demand for US agricultural products, as well as the outbreak causing global economic growth be nicked in the first quarter. However, by mid-week this week the coronavirus scare seems to have passed, as seen by rallying global stock markets. Importantly, the move by China’s central bank this week to inject short-term liquidity into the Chinese financial system to support domestic businesses hurt by the coronavirus outbreak, sent a signal to the global marketplace that China intends to blunt any negative effects from the illness. And, as one long-time market analyst said, “The Chinese people still have to eat.” As is many times the case, an unexpected shock to the marketplace is initially deemed by traders as being close to a worst-case scenario and market prices react accordingly. Then, such turns out not to be the case, as is apparently so with the coronavirus outbreak. Look for rallies in corn and soybeans in the near term to be very limited, due in part to mostly favourable weather in South American growing regions expected to produce big crops there.

The next week’s likely high-low price trading ranges

March soybean meal futures: $285.00 to $297.00 but with an upside bias.

March soybean futures: $8.68 3/4 to $9.00 but with an upside bias.

March corn futures: $3.75 1/4 to $3.94 with sideways trading bias.

March soft red winter wheat futures: $5.46 1/2 to $5.73 1/2 with sideways trading bias.

Latest US Department of Agriculture (USDA) reports

Highlights from the USDA’s January supply and demand report on grains (WASDE).


The outlook for 2019/20 US wheat is for stable supplies, increased feed and residual use, and lower stocks. Feed and residual use is raised 10 million bushels on lower-than-expected second-quarter stocks reported in today’s NASS Grain Stocks report. Seed use is down 1 million bushels reflecting 2020/21 wheat planted area released today in the NASS Winter Wheat and Canola Seedings report.

Ending stocks are now projected at 965 million bushels, down 9 million from the previous report. The season-average farm price is unchanged at $4.55 per bushel.

Foreign production for the 2019/20 market year is dropped 1.0 million tonnes led by a 1.0- million-tonne reduction for Russia on updated government production data, and a 0.5- million-tonne decrease for Australia reflecting the severe drought conditions in parts of the country. Partly offsetting is a 0.5-million-tonne increase for the European Union.

Foreign consumption is raised fractionally, and global exports are raised 1.3 million tonnes. The export increase is led by a 2.0-million-tonne increase for the EU on improved price competitiveness and a 0.5-million-tonne increase for Ukraine on pace to date. Partly offsetting is a 1.0-million-tonne decrease for Russia reflecting lower supplies and higher relative prices. With foreign supplies falling and total use increasing, foreign ending stocks are lowered 1.2 million tonnes to 261.8 million.


The latest 2019/20 US corn outlook is for greater beginning stocks, slightly higher production, reduced food, seed, and industrial use (FSI), larger feed and residual use, lower exports, and smaller ending stocks. Beginning stocks are raised 107 million bushels reflecting upward revisions to both on-farm and off-farm stocks as of 1 September as reported in Grain Stocks.

US corn production is estimated at 13.692 billion bushels, up 31 million as a higher yield more than offsets a reduction in harvested area. Total corn use is up 155 million bushels to 14.070 billion. Exports are reduced 75 million bushels to 1.775 billion, reflecting the slow pace of shipments through December, and the lowest level of outstanding sales as of early January since the 2012/13 marketing year. FSI use is lowered 20 million bushels, with lower projected corn used for starch, glucose and dextrose, and high fructose corn syrup.

US feed and residual use is raised 250 million bushels to 5.525 billion, based on indicated disappearance during the September-November quarter and the 2018/19 marketing year as reflected by the Grain Stocks report. With use rising more than supply, 2019/20 corn stocks are reduced 18 million bushels. The season-average corn price received by producers is unchanged at $3.85 per bushel.

The January USDA foreign coarse grain outlook is for slightly lower production and consumption, and reduced stocks. Foreign corn production is forecast higher with increases for Bangladesh, Russia, and the EU. Other major coarse grain production changes include larger barley production for the EU, with reductions for China and Australia. Major global coarse grain trade changes for 2019/20 include increased corn exports for Ukraine and the EU. For 2018/19, Brazil’s exports for the marketing year beginning in March 2019 are raised based on observed shipments to date.

Foreign corn ending stocks are lower, mostly reflecting reductions for China and Brazil. Global corn stocks, at 297.8 million tonnes, are down 2.8 million.


US oilseed production for 2019/20 is estimated at 107.4 million tonnes, down 0.2 million from last month’s report. Smaller canola, sunflowerseed, peanut, and cottonseed crops are partly offset by a larger soybean crop. Soybean production is estimated at 3.56 billion bushels, up 8 million on a higher yield. US harvested area is estimated at 75.0 million acres, down 0.6 million from the previous forecast, with the largest reductions for North Dakota and South Dakota.

US soybean yield is estimated at 47.4 bushels per acre, up 0.5 bushels. US soybean supplies are relatively unchanged as lower beginning stocks and imports offset higher production. With crush and export forecasts unchanged, US ending stocks are projected at 475 million bushels.

The US season-average soybean price for 2019/20 is forecast at $9.00 per bushel, up 15 cents in part reflecting stronger soybean oil prices. The soybean oil price forecast is raised 3 cents to 34.0 cents per pound. The soybean meal price forecast is reduced $5.00 to $305.00 per short tonne.

Foreign oilseed 2019/20 production is up 0.2 million tonnes to 467.2 million, with higher sunflowerseed production partly offset by lower cottonseed, rapeseed, and palm kernel. Sunflowerseed production is increased for Russia on higher yields. Palm kernel and palm oil production are lowered for Malaysia due to dry weather conditions over the past year. Lower global vegetable oil production paired with increasing demand results in a 9 percent year-over-year decline in vegetable oil stocks. Other notable oilseed changes include a 0.5-million-tonne increase to Chinese soybean crush due to a higher-than-expected pace to date.

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