Relentless Chinese demand and a recovery from the global pandemic will mean smaller-than-expected U.S. stockpiles of corn, wheat and soybeans.
Reserves at the end of next season are forecast to fall short of analysts’ expectation for the three crops, the U.S. Department of Agriculture said Friday in a report ahead of its Outlook Forum. Corn stockpiles are forecast 10% below expectations and soybeans will be 19% less than expected, according to the USDA. Wheat reserves also fell below the average forecast by 9.2%, with the carryout expected to be the lowest since the 2013-14 season.
The report was “friendly soybeans, slightly friendly corn, and slightly friendly wheat,” said Terry Reilly, an analyst at Futures International in Chicago. “While we see the USDA commodity outlooks as a good starting point for new crop, supply and demand rarely comes in agreement with what actually happens.”
China is scooping up American crops to feed a hog herd that’s expanding fast from a deadly pig disease. The Asian nation has already bought a record amount of American corn and executives from some of the world’s largest commodities traders including Cargill and Archer-Daniels-Midland say demand will continue.
Corn exports are expected to rise 50 million bushels to 2.7 billion bushels due to Chinese purchases, while usage for ethanol is set to rebound 5% after the coronavirus pandemic kept cars off the roads.
“It is a very aggressive corn demand number,” said Matt Campbell, risk-management consultant at StoneX in West Des Moines, Iowa.
Tight soybean supplies will mean exports are expected to fall 50 million bushels to 2.2 billion bushels, while crush will also climb to 2.2 billion bushels, a record, the USDA forecasts.
“Despite increasing global import demand, U.S. market share is likely to decline on limited exportable supplies,” the USDA said.
Corn rose ahead of the formal open of trading in Chicago. Futures for May delivery crept up less than 1% to $5.05 a bushel as of 8:08 a.m. local time. Prices soared to seven-year highs earlier in the month amid supply concern as China scooped up the grain in record amounts. May soybean futures rose 0.3% to $13.8075 a bushel while wheat for May delivery was little changed at $666.25 a bushel.