- The USDA’s stocks and seedings reports are viewed as bearish corn and neutral wheat and soybeans – but not that there were any real bullish surprises in any of the data. Below is a table of quarterly stocks, which were above expectations in wheat, but otherwise very close to previous trade estimates.
- Wheat’s feed consumption is expected to be lowered 10-25 million bu in the April WASDE – pushing ending stocks even closer to 1,000 million bu – but no changes are expected in US corn and soybean balance sheets. However, NASS did confirm that stocks of all major crops are well above last year, and that major row crop acreage declined only slightly despite a full year of low prices.
- March 1st corn stocks at 7,808 million bu are just a bit higher than expectations, and work indicates that total disappearance through the first half of the crop rests at 7,553 million bu, down 2% from last year and a number that suggests the USDA’s total consumption forecast is overstated by 50-100 million bu.
- Soybean stocks as of March 1st totaled 1,531 million bu, 20 million below expectations but 204 million above last year. Soybean residual disappearance is estimated at 34 million bu, the first positive number in four years. The differences between corn and soybean stocks and trade expectations is not significant enough to trigger any major revisions within the April WASDE.
- The big surprise of the day, however, is acreage. To the surprise of many, US farmers intend to plant 93.6 million acres of corn, up a full 4.4 million from intentions a year ago and well above trade guesses. The by-state data correlates well with the drop in winter wheat seedings, and with normal weather and trend domestic use, 2016/17 corn stocks will reach well above 2,000 billion bu. Soybean acres at 82.2 million were roughly a million below expectations, but this is likely to be raised 0.5-1.0 million amid corn planting delays in the Delta/Southeast. And stripping one million acres from corn will do little to change corn’s new crop balance sheet. NASS data today confirmed that there are more than enough acres to go around for spring row crop production – supply-driven rallies now await July/August weather.
- Spring wheat acreage at 11.3 million was surprisingly low. Some of this will be buffered by a lack of HRS export demand and huge carryover stocks, but no doubt MGE contracts will continue to gain on KC and CME futures until N Plains/Canadian summer weather patterns are known. Winter wheat acres at 36.2 million are down 400,000 from NASS’s January estimate, with additional losses noted in TX and CO. Acres in KS, NE and OK are steady to higher. US wheat ending stocks will end up at 990-1,000+ million bu, and this will more than offset any loss of production in 2016/17. Note that European wheat futures are down the equivalent of $.10/bu at midday.
- Our immediate view of today’s release is that corn acres are the highlight, not only bearish at first glance but also when compared with trade expectation, the 3.5 million acres surplus will act as a buffer against lower that anticipated soybean acres as well as minor planting issues which may, or may not, arise. Corn price could well test $2.75/bu at or close to harvest.