Chicago Board of Trade Market News
Outlook: USDA published the February WASDE report on Tuesday Feb 10and the data is expected to have a rather neutral influence on price because the more bullish decline in U.S. feed grain ending stocks was offset by increasing global corn stocks. The result is that corn futures contracts continue to trade sideways in a horizontal pattern. The top and bottom of that trading range will presumably be tested as prices are influenced by factors such as South American harvest, the pace of U.S. export sales, spring weather and acreage prospects in the Northern Hemisphere.
The February WASDE reduced ending stocks for U.S. corn, sorghum and barley in the current 2014/15 season. The ending stocks estimate for U.S. corn was reduced because of the expectation that greater gasoline consumption during 2015 will result in more ethanol usage. The increased ethanol production will produce more distiller grains, and that is a reason that U.S. feed consumption of corn was reduced. The final outcome of such adjustments is that U.S. corn ending stocks declined by 50 million bushels, from 1,877 to 1,827 million bushels. U.S. sorghum stocks were reduced from 32 to 27 million bushels because of strong exports while U.S. barley stocks were reduced from 82 to 77 million bushels because of reduced imports from Canada.
World corn production was increased for the 2014/15 season, but it was primarily offset by increased consumption. The increased corn trade is expected to consume the larger supplies from Ukraine and Argentina. Larger global supplies and U.S. corn ending stocks of 1827 million bushels do not warrant any price rationing. However, USDA’s data also indicates that there is no surplus to cushion any sizable shortfall in next season’s feed grain production.