Weekly Market Review
The USDA released their planting intentions numbers on March 31st. Corn acres were at 97 million acres compared to the average trade estimate of 94.1 million acres. This would potentially be the largest planted acres since the record high in 2012. Some analysts think acres will fall below this number due to possible weather delays and reduced demand from ethanol. Soybean acres came in at 83.5 million acres, which was below the average trade estimate of 85 million acres. The current soybean to corn ratio is 2.46:1 with some analysts thinking it could go above 2.6:1, helping soybeans look more appealing for planting.
U.S. March 1st corn stocks were at 7.95 billion bushels, slightly below the average estimate of 8.12 billion bushels. Soybean stocks were 2.253 billion bushel, slight above the average estimate of 2.241 billion bushels.
As expected, U.S. ethanol production dramatically declined last week. The weekly ethanol production report showed the largest week-to-week decline ever recorded. Production dropped by 165,000 barrels per day to 840,000. Of the 165,000 barrel reduction, 156,000 of the decrease was reported in the Midwest, confirming the large expected decline in corn usage. Despite the large drop in production, stocks jumped to a record 25.72 million barrels. Ethanol blender demand decreased by 273,000 barrels per day to 601,000 barrels per day. The data is the lowest blender demand on record since they started collecting the data in 2010.
The USDA also released their February soybean crush report this week. They reported that 181.6 million bushels were crushed for the month, a new February record. The crush total was 2.6 million bushels higher than the highest estimate and 19 million bushels above last year’s February crush total.
Dry conditions in Brazil continue to push soybean production estimates lower. Several private forecasters have reduced their estimates in recent weeks. INTL FC Stone decreased their Brazilian estimate recently to 120.13MMT, down 4.07 MMT. The USDA’s latest projection was for 126 MMT. Trade will be looking to the April WASDE report to see what the USDA makes for adjustments.
Questions are beginning to circulate about the impact dry conditions are having on Brazil’s corn crop. Sources are stating that one-third of Brazil’s Safrinha crop is stressed, with some areas reporting only 50 to 75% of normal moisture in the past 30 days. Typically, this news would garner more attention, but the COVID-19 news and large U.S. corn supply has caused it to be overlooked.
Soymeal futures have weakened recently on news that the world’s largest meal exporter is operating again. Argentina reported that their ports and processors are back in operation after disruptions from COVID-19. Farmer selling in Brazil has dropped basis values in that country significantly. Imports to China now look to favor Brazil over the U.S. through August, once again bringing into question the USDA’s soybean export forecast.
For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Adam Suntken. 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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