Morning Corn: Bearish USDA News Sparked 2-day Surge to Contract Highs; Weather
Ideas that Argentina weather has been bad enough since early February to cause a significant adjustment lower for the next USDA update, and that more damage is possible if the two-week forecast stays mostly dry helped to support the upside break-out after the bearish USDA news. May corn closed sharply higher on the session and pushed to a new contract high for the first time since January 31 while March corn took out the May 7th contract high. US 2021/22 corn ending stocks came in at 1.540 billion bushels versus an average trade expectation of 1.500 billion and a range of estimates from 1.200 to 1.590 billion. This and all the US numbers were unchanged from the January report. World ending stocks came in at 302.22 million tonnes versus an average expectation of 299.50 million (range 288.00 to 303.40 million) and 303.10 million in January. Brazilian corn production came in at 114.00 million tonnes versus an average expectation of 113.30 million (range 110.00 to 116.10 million) and 115.00 million in January. Conab this morning pegged Brazil corn production at 112.9 million tonnes.
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Argentine production came in at 54.00 million tonnes versus an average expectation of 52.10 million (range 49.00 to 54.00 million). This was unchanged from the January number. Ethanol production for the week ending February 4 averaged 994,000 barrels per day (lowest since October 1, 2021). This is down 4.5% vs. last week and up 6.1% vs. last year. Total Ethanol production for the week was 6.958 million barrels. Stocks as of February 4 were 24.799 million barrels. This is down 4.1% vs. last week and up 4.2% vs. last year. Corn used in last week's production is estimated at 100.9 million bushels. Corn use needs to average 100.1 million bushels per week to meet this crop year's USDA estimate of 5.325 billion bushels.
MARKET IDEAS
The report news was bearish, as the USDA left all the US numbers unchanged from last month, left Argentina production unchanged, and lowered Brazil by only 1 million tonnes. Traders had expected significant reductions in Brazil's and Argentina's production. However, the two-week weather outlook for the region and the poor growing conditions since the beginning of February suggest next month's report could show significant production losses. March corn support is at $6.46 and $6.42, with $6.90 ½ as next target on a close over $6.54 ¾.