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WASDE Shocks Send Corn, Bean Prices Soaring

January 12, 2021

Dramatically lower supply will send corn prices higher and reduce exports, according to USDA’s World Agricultural Supply and Demand Estimates (WASDE) released today. The department cut its corn production estimate by 324 million bushels to 14.182 billion, based mostly on an average yield drop of 3.8 bu. per acre. USDA also cut projected corn use by 250 million bushels to 14.575 billion and slashed exports by 100 million bushels.

In addition, USDA reduced expected use of feed and ethanol. However, USDA’s anticipated cuts in demand were not deep enough to offset a 150-million- bushel reduction in ending stocks, forecast at 1.552 billion—well below analysts’ pre-report estimate of 1.599 billion. Nearby corn futures traded limit-up following the report, with the March through July contracts breaking $5/bu.

After slapping a two-month ban on corn exports, Argentina said it would partially resume exports, which could help take some pressure off world supplies. The country’s Agriculture Ministry announced yesterday that it would allow 30,000 metric tons of corn per day to be exported in an effort to head off a three-day farmer strike, but unhappy corn farmers pledged the strike would continue through Wednesday.

For soybeans, USDA raised its export estimate by 30 million bushels to a record- high 2.23 billion and increased imports, signally that the U.S. bean supply could be depleted prior to harvest. The department lowered estimated soybean production by 35 million bushels to 4.135 billion bushels, due to a yield reduction of 0.5 bu. per acre. Lower supplies and increased demand put projected ending stocks at 140 million bushels, down 35 million from December. The department raised the soybean crush forecast by 5 million bushels, reflecting better export prospects, due to dry weather in Argentina, a late harvest in Brazil, and strong demand. According to Safras and Mercado, Brazilian soybean producers have sold nearly 58% of their 2021 crop, compared to an average 38.6% and 43% last year. U.S. soybean futures soared 50¢ in the wake of the WASDE report, with nearby contracts breeching the $14/bu. mark.



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