How Bearish Was the USDA February WASE Report?

March corn was trading up 10 cents a bushel and on contract highs when the USDA released the WASE Report at 11:00 Tuesday morning. About 8 minutes later corn was trading 20 cents below the contract high. That is what you could call volatility. Were the corn numbers that bearish? I guess at least traders and the funds think so!

The USDA did cut corn carryover by 50 million bushel while the average trade guess was a cut of 250 million. So, compared to the trade guess it was bearish. But, how bearish? Even with the current USDA corn carryover projection we have the lowest, or tightest corn carryover in seven years! Plus, the USDA is projecting the corn carryover of 1.5 billion bushel at the end of the marketing year which is August 31, 2021. That is a long time and a lot can happen between now and then.

In addition the USDA is projecting a record bean crop from South America plus a record second crop of corn. Their bean crop harvest is just getting started now, later than normal and then the second crop of corn needs to get planted. The other big unknown is how big will the bean and corn crop be here in the U.S this growing season? I am sure the USDA Outlook Forum later this month will be projecting big increases in corn and bean acres so that will give the bears more to work with.

Really when you think about it the corn and bean price direction from here, like usual, all comes down to the weather in South America and our weather during the 2021 growing Season!