There were no major surprises in the March USDA supply and demand report. A few slight downward revisions to demand for corn on feed and ethanol as expected. Soybean exports remain unchanged and crush increased slightly. With the uneventful reaction to last Friday’s report, the trade will start focusing more on the planting intentions report on March 29th. The acreage debate remains cloudy, as no crop is the clear winner. The early talk of large shifts to corn has backed down some to a more modest shift from soybeans to corn.
Analysts are looking at yield patterns based on planting date. Agronomic data suggests that early planting has the best chance for better than trend line yields. However, history indicates there is a 50 percent chance for trend-line yields when planted two weeks after what is considered the ideal window.
Informa released their March crop acreage estimates on Tuesday, which contained some decent sized changes from last month. For corn, they increased the acreage total by 180,000 acres totaling 91.8 million acres. This compares to last month’s number of 91.62 million. Soybeans saw a decrease of 550,000 acres for a total of 85.5 million acres. This would compare to 86.05 million they posted last month. Wheat saw a decrease of 60,000 acres to 46.7 million acres.
U.S. Trade Representative Robert Lighthizer spoke before the Senate Committee on Tuesday, concerning the ongoing trade deals with China and Japan. He’s still optimistic a trade deal with China will happen soon. However, he also stated there are still major issues that need to be addressed and an agreement will not be made if the issues aren’t resolved in a way benefiting the United States. A trade deal with Japan was also discussed, with Lighthizer stating an agreement with Japan is still a top priority but will take some time. He said he would like to see the agricultural part in the trade agreement taken care of, due to the market situation in Japan.
The trade has shifted their focus on weather from South America to North America with the arrival of March on the calendar. Snow pack in the northern and western Corn Belt is more significant than last year and moisture levels are above average. There is still time for an early to normal spring, but forecasters are still leaning to a slightly later spring, followed with the latter part of the summer expected to be on the dry side. Early planting in the south is lagging slightly, but we all have seen how quickly Mother Nature can straighten out and how fast planting progress can catch up.
Ethanol manufacturing for the week ending March 8th declined 19 million barrels from the prior week to 1.005 million barrels per day. The production figure is down 2 percent from last year’s number. Ethanol stocks also saw a decrease from the prior week. Reserves now stand at 23.731 million barrels, 530,000 less than last week.
It was reported that China booked another 2 to 3 cargoes of Brazilian soybeans. China’s future needs are heavily in question as African Swine Fever has largely cut soybean meal demand. The estimated crush is down 13 percent from last year. Estimates are that China has over 100 percent of soybean coverage for March, 80 percent for April, 45 percent for May and around 30 percent for June.
Export sales for the week ending March 7th were disappointing for corn and wheat. Corn sales totaled 14.6 million bushels, which was half of the low end of trade’s expectations and well below last week. Wheat sales came in at 9.7 million bushels, 8 million under the low end of the expected range. Soybeans sale were favorable coming in at 70.3 million bushels, which was above trades expectations and the weekly needed total. The marketing year total to 1.513 billion bushels, which is down 300 million bushels from last year at this time. The current pace is lagging the USDA’s figure by 168 million bushels but 50 million bushels closer than last week’s pace. Some analysts are still optimistic that pace can be met if China follows through with recent purchases. The price spread between the U.S. and Brazil is making some question if they will actually follow through.
For more information, you may contact Kristi Guse at (712)-260-6486, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Kristi Guse. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
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