- NASS/USDA March 1 US Stocks/Seeding Analysis: The reports held something for everyone. actually, some bullish and some bearish for each of the primary US grains and soybeans.
- March 1 US corn stocks were bullish while 2020 US corn seedings were bearish, US 2020 soybean seedings were bullish, while stocks were bearish. And in wheat, stocks and seedings were close to expectations. It is a hodge-podge for the markets that won’t offer a lasting chance of a rally without a dire weather problem. It is back to trading ethanol demand destruction and spring weather for seeding. Dryness in the Black Sea is offering a bid for world wheat futures and will become more important after the Easter Holiday.
- The big surprise for US corn seeding was 2020 estimated seeded acres of 97.0 million, the highest US corn seeding total since 2012. The NASS corn seeding estimate was outside of the highest industry guess. Research notes that North Dakota corn seeding at 3.2 million acres is down 8.6% while Kansas was off 1.6% at 6.3 million acres, and KY off 3.2% at 1.5 million acres. IL corn seeding expanded 8% to 11.3 million acres.
- March US corn stocks at 7,953 million bu were down 660 million from last year, a mildly bullish surprise. However, such stocks are adequate and the industry’s confidence in NASS’s corn stock totals is low. Amid US ethanol plants likely consuming 300-400 million bu less corn through August, the gain of200 million bu of feed demand does not entice a bullish response with 2020 US corn acres so large.
- It is estimated that second quarter corn feed/residual use of 1,379 million bu or a 186 million bu larger than last year. Such a feed/residual use is more in line with the 5-year average compared to last year’s shockingly low use estimate.
- As you would expect, as US farmers seeded a greater number of acres to corn, 2020 US soybean seeding increase were less than expected. NASS indicated that US farmers would seed 83.5 million acres of soybeans, up 8.5 million acres from last year, but down 1.5 million acres from trade expectations. The soybean seeding edges supportive to the market with end stocks tighter. The market will push US farmers to seed more soybeans vs corn. Some are forecasting that 1.0 million acres of corn seeding intentions could be pushed to soybeans. The soybean/corn ratio should push out to 2.6:1 by June.
- Yet, US soybean March 1 stocks were slightly bearish with larger supplies. US March 1 soybean stocks at 2,253 million bu were down 490 million bu from last year, but up 16 million bu from trade estimates. Amid slowing US soybean export demand in an old crop position, the US has more than adequate stocks which looks to cap rallies above $9.00 spot futures. China must return for large US soybean purchases in late summer if there is any chance for the WASDE export estimate to not decline 200-300 million bu.
- US 2020 wheat seeding was down 800,000 acres from last year amid reduced durum seedings of -14%. US durum seeding at 1.29 million acres was down 200,000 acres. We note that US oat seeding intentions were up 9% at 3.01 million acres with barley up 8.7% at 2.69 million acres.
- US 8 crop seeding was up 1.1% from last year’s March Intentions at 253.5 million acres, in line with prior final year plantings (excluding last year’s wet spring and 19.7 million acres of Prevent Plant). This 8-crop seeding estimate is up 3.5 million acres from the WASDE February forecast.
- Research sees the NASS Seeding Report as the most important far long term Chicago price direction. The surprisingly large US corn seeding estimate will push 2020/21 US corn stocks above 3,700 million bu (forecast) and justify a price in December corn futures below $3.00, possibly as low as $2.80/bu at harvest. Of course, this assumes that spring seeding will occur normally, and that summer weather will allow trendline yields.
- November soybean rallies will be capped by the low price of corn and the falling value of the Brazilian Real while the wheat market follows the production potential in the Black Sea and Europe.