- HEADLINES: USDA March stocks/seeding report a bullish shocker; Corn/soybeans limit up on bullish 2021/22 balance sheets; US corn feed/residual too low.
- The USDA Stocks/Seeding Report was bullish with 2021 US corn and soybean seedings well below trade estimates. This creates a need for the marketplace to secure/buy additional acres this spring. Moreover, March 1 US corn stocks were 100 million bu less than expectations which creates the need for the USDA to raise its feed/residual use estimate by 75-125 million bu in April. A final 2020/21 US corn feed/residual use above 5,900 million bu can be argued based on feed usage rates in the first half of the crop year. Price has not created any rationing of demand in the US feed, ethanol, or export markets. And in the case of soybeans, supplies are not adequate to meeting the expanding crush for biodiesel.
- Chicago corn raced to limit gains of 25 cents, soybeans to limit gains of 70 cents, while wheat is following with gains of 15-20 cents. The KC wheat/corn spread is expected to narrow close to even money in the coming trading days. US wheat futures will not be able to trade much lower amid the bullishness of corn and new crop soybean balance sheets. Midwest spring weather conditions just became significantly more important in the weeks to come. Somehow the market must encourage farmers to seed an additional 1.5-2.0 million acres of US soybeans.
- US farmers indicated they will plant 316.2 million acres to all crops, up 6.1 million acres from 2020. Kansas crop seedings were up 3.7% while North Dakota seedings were up a solid 10.6%. Iowa total seeded acres held steady at 24.3 million acres. US 2021 all crop seedings are the largest since 2018, but well below trade hope that US farmers would plant a combined 183 million acres of corn/soybeans. NASS indicated that US farmers would seed 178.7 million acres of both principal crops which is 4.3 million acres less than pre-report expectations. NASS forecast that total US harvested crop acres at 291.7 million acres, up 6.9 million acres.
- US 2021 corn seeding was estimated at 91.1 million acres, up just 300,000 acres from last year. IA corn acres fell 2.9% to 13.2 million acres, while IL was down 3.5% to 10.9 million acres. Even Kansas corn acres fell by 4.9% to 5.80 million acres. Assuming harvested acres of 82.50 million acres and trend yield of 179.5 bushels/acre, 2021 US corn production is forecast at 14,810 million bu. Such a crop is well below 2021/22 usage which we forecast at 15.25 billion bu. The 2021 crop year is now a stock depleting year without acute demand rationing.
- US 2021 soybean seeding was forecast at just 87.6 million bu which was up 4.5 million acres or 5.4% from 2020. North Dakota farmers indicated that they would plant 22% more soybeans or 7.0 million acres, Minnesota seedings were up 5.4% to 7.8 million acres, while Iowa was up 4.3% to 9.8 million acres. Finally, Illinois acres were up 3.9% to 10.7 million acres. US harvested soybean acres are estimated by us at 86.7 million acres with trend yield producing a crop of 4,405 million bu. This crop is 140 million bu below calculated use, producing negative or pipeline 2021/22 stocks.
- NASS forecast that 2021 US wheat seeding would reach 46.4 million acres, up 5% from 2020 with spring wheat acres estimated at 11.74 million acres, down 4.2%. Montana cut its spring wheat seeding by 12% to 1.38 million acre while N Dakota spring wheat seeding was off 1.8% to 5.6 million acres. US winter wheat was pegged at 33.1 million acres, up 8.8% from 2020. US wheat seedings were above forecast.
- US March 1 corn stocks at 7,700 million bu, were down nearly 100 million bu from trade forecasts. The second quarter feed/residual use rate was 1,396 million bu, the largest since March of 2018. First and second quarter corn feed/residual use argue for the USDA to raise their 2020/21 usage rate by 75-125 million bu, at least. On a stock/use ratio at the beginning of March, the ratio was a record low with massive US corn exports to China working. We forecast 2020/21 US corn end stocks between 850-900 million bu which could push May futures to $6.00-6.25. Any Brazilian winter corn crop losses now become highly important in April/May.
- US March 1 soybean stocks at 1.56 million bu were slightly larger than forecast with a quarterly negative residual use of -56 million bu. For the crop year to date, the residual is just 18 million bu. NASS did find back soybeans, but the recovery was not enough to counter the unexpected loss of 2021 US soy seedings.
- To conclude, spot Chicago corn has upside potential to $6.00-6.25 with December corn rising to $5.00-5.25. May soybeans are likely to score new highs and rise close to $15.00 with November needing to rally to $13.50-14.00 to secure extra acres. Wheat will be the follower in its effort to stay out of the US feed ration.