The USDA surprises trade with stocks and acres report
The quarterly stocks data released Friday March 29th, showed March 1st corn stocks at 8.605 billion bushels. This was 270 million bushels above the average trade estimate of 8.335 billion bushels but below the stock figure from last year by 287 million bushels. The larger stocks are perceived as a decrease in feed usage or the USDA underestimated 2018 corn production.
Soybean stocks also came in above the average trade guess. A new record total of 2.716 billion bushels were reported while trade was looking for 2.683 billion. Last year March 1 soybean stocks were reported at 2.109 billion bushels, which was also a new record at that time. Wheat stocks totaled 1.591 billion bushels versus the average trade guess of 1.555 billion bushels.
Prospective planting report
The prospective planting report caught trade off guard.
Corn acres were reported at 92.8 million, almost 1.5 million more than expected and a large 3.67 million above last year’s planted acreage. This coming year soybean acres are forecasted to drop by a large 4.6 million from last year at 84.6 million acres. All wheat acres came in at 45.8 million versus the average trade guess of 46.92 million acres. This survey was as of March 1st, so it is quite likely that recent floods have impacted intensions. If wet weather persists, it’s very likely soybean acres will increase at the expense of corn acres in the June release.
African swine fever
Researchers in China reported that they have isolated a strain of the African swine fever virus, leading to a possible vaccine.
According to Dr. Paul Sundberg with the Swine Health Information Center, even though there are reports of a new isolate being grown and that is encouraging, a vaccine is still probably several years away. There are lots of issues and hurdles to cross when developing an effective vaccine, as well as many tests and studies that will need to be run. However, Sundberg is optimistic a breakthrough will lead to a vaccine for the highly contagious African swine fever virus.
According to the South China Morning Post, there have been 114 reported cases of African swine fever across China and that over 950,000 pigs have been culled.
Ethanol Manufacturing for the week ending March 22nd was down 29,000 barrels per day to 975,000 barrels per day, which was the lowest it’s been since early February.
Ethanol stocks showed an increase of 36,000 barrels from last week to 24.4 million barrels. The lack of rail movement in the Midwest due to flooding caused stocks to raise to a record high of 9.26 million barrels for the region. Infrastructure issues and flooding also attributed to the decrease in production.
Export loadings for the week ending March 21st for corn came in at 39.2 million bushels, which was slightly ahead of expectations but below the weekly needed amount to reach the USDA’s target. Soybean loadings came in at 31.5 million bushels, near the high range of estimates but below the amount needed. Wheat inspections came in at 12.5 million bushels, which was below the volume needed and trades expectations.
Analysts have been monitoring export data closely. Corn loadings to date are running ahead of the seasonal pace needed to reach the USDA’s estimate but are slowly losing ground. Analysts are quick to point out that disappointing sales will be reflected in the inspection reports, eventually leading the USDA to trim export forecasts in future reports. Brazil’s safrinha crop and logistics will play a large part in the outcome.
Soybean exports have been increasing in recent weeks with the return of Chinese buying. While shipments are improving they continue to run below the pace needed and seems unlikely that the pace will be met. To see a reduction by 50 to 100 million bushels in future reports would not come as a surprise.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin begun trade talks with with one of China’s Vice Premiers in Beijing Thursday, March 28th. It was stated by Chinese leaders that they would purchase more US goods ahead of the next round of discussions, putting trade on watch for flash sales. President Trump tweeted earlier in the week that he may leave tariffs on Chinese goods for a substantial amount of time, even if an agreement is reached to ensure that guidelines of the deal are followed.
For more information, you may contact Mick Hoover at (515)-200-5115, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Mick Hoover. 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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