CBOT weekly outlook: Global grain stocks exert pressure

MarketsFarm — A forecast of sizeable global ending stocks is weighing on values at the Chicago Board of Trade (CBOT), according to Terry Reilly, senior commodity analyst for Futures International in Chicago.

The U.S. Department of Agriculture (USDA) on Tuesday issued its monthly supply and demand report in which it forecast global corn carryout to rise by 7.9 per cent in 2020-21 to 339.62 million tonnes. Also, global wheat ending stocks are forecast to increase by 5.1 per cent to a record 310.12 million tonnes.

In USDA’s May world agricultural supply and demand estimates (WASDE), soybean carryover is expected to dip by 1.87 per cent at 98.39 million tonnes in the coming marketing year, although increases in South American production are expected to outstrip more soybeans grown in the U.S.

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USDA forecast corn ending stocks in the U.S. would jump by 52.5 per cent in the coming crop year to more than 81.28 million tonnes.

Meanwhile, USDA’s projected 2020-21 carryovers for U.S. wheat and soybeans could take some of the pressure off. Domestic wheat ending stocks are expected to drop by almost 7.1 per cent to about 24.74 million tonnes. Soybean ending stocks in the U.S. were pegged to fall 30.2 per cent at 11.02 million tonnes.

But Reilly stressed the global numbers were still exerting the most pressure on values. With that data in mind, he theorized CBOT soybeans could drop to $8.30 per bushel in the coming weeks, and corn might soon fall to $3.09 per bushel (all figures US$) — “especially if the U.S. weather continues to be favourable.”

However, he said, U.S. ethanol stocks were declining, which would provide some measure of support for corn, or at least limit further losses.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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