Washington/Chicago | Reuters — Strong demand for U.S corn and soybeans will cut into the abundant domestic supply stockpile by more than expected, according to government data released on Wednesday.
The U.S. Department of Agriculture’s outlook for tighter corn and soy supplies, issued in a monthly crop report, surprised analysts who expected an increase in corn inventories. However, prices for corn and soybeans slumped due to large global supplies.
“Even though the USDA number would ostensibly be friendly, the world numbers are just choking us,” said Mark Gold, managing partner of Top Third Ag Marketing in Chicago.
USDA projected U.S. corn ending stocks for the 2014-15 crop year at 1.998 billion bushels, down from its last forecast of 2.008 billion bushels.
The USDA pegged 2014/15 U.S. ending stocks of soybeans at 410 million bushels, down 40 million from its previous estimate. Exports were raised to 1.76 billion bushels from 1.72 billion.
Analysts were expecting U.S. soybean ending stocks of 427 million bushels and U.S. corn ending stocks of 2.027 billion bushels, according to a Reuters poll.
“It ain’t like we’re running out of soybeans,” Gold said.
Corn and soybean futures prices rallied this autumn despite record U.S. harvests of both crops due to strong demand, as well as slow farmer sales that have also kept cash markets firm.
Traders “were expecting strong demand numbers,” said Dax Wedemeyer, U.S. Commodities analyst in Iowa. “We rallied into the report, and because of that a lot of it was dialed in.”
For wheat, USDA raised its domestic stocks outlook to 654 million bushels from 644 million, matching market forecasts.
USDA also issued surprise increases to its global corn and wheat outlook because of bigger-than-expected production in Canada, China and the EU.
World wheat ending stocks were pegged at 194.9 million tonnes, up two million from its November outlook and topping forecasts for 191.75 million tonnes.
The government raised its global corn ending stocks view to 192.2 million tonnes from 191.5 million, Analysts, on average, were expecting global corn ending stocks of 191.42 million tonnes.
For soybeans, USDA lowered its global ending stocks projection to 89.87 million tonnes compared with expectations of 89.7 million.
— Reporting by Mark Weinraub and Tom Polansek for Reuters.