Less bearish expectations in bearish forecasts are supportive for prices
July 12, 2024
Key Observations:
Today USDA lowered its 2024/25 projections for U.S. ending stocks of corn and soybean oil.
The trims came on price-driven increases in actual and projected demand rather than price-driven cuts in projected harvested acreage or weather-related cuts to projected trend yield.
We still expect those two supply-side factors to realize lower than the current USDA forecasts for corn and soybeans. But at this early stage in crop progress, USDA still opts to model trend yield and stick with the numbers published two weeks ago in the annual Acreage report (Projected corn stalks rely on wobbly stilts, 28-Jun-2024).
USDA now projects U.S. corn stocks in September 2025 will be 2.097 billion bushels, or 14.1% of projected domestic use plus export demand in the 2024/25 crop year (14.905 billion bushels). The prior forecast had stocks-to-use at 14.2%. USDA raised its 2024/25 U.S. corn demand number by 100 million bushels: 75 million bu for animal feed and 25 million bu for exports. Prompt Jul-24 CBT expired today down nearly 7 cents at $4.00 per bu. In contrast, the most-active Dec-24 CBT contract advanced by 4 cents to $4.14 per bu. We continue to believe a bottom-forming process is unfolding.
In bean oil, USDA now projects U.S. stocks will be 1.777 billion lbs in September 2025, or 6.2% of projected total use. This revision, too, is a 0.1% reduction from the prior forecast for stocks-to-use. BON4 rolls off the board at 47.55 ¢/lb (+0.93%).
Source: USDA, CBT, Blacklight Research.
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