- It’s USDA report day, and there is a little something for everyone. At face value this morning’s data is bearish soybeans and wheat, and bullish corn, but all markets at midday at trading fairly steadily. In fact, beans are up 4-6, corn is up 1-2, and wheat is down 5-7, but has crawled off its lows. USDA cut US soybean exports another 60 million bu and raised end stocks by a like amount. No other changes were made, but so far the downward adjustment is fair given the pace analysis of sales and shipments. US corn exports were raised a hefty 125 million bu, more than expected, and cut end stocks by 125 million to 2,352 million. US corn stocks/use at 16% is now very little changed from last year, and further hikes in exports are possible if Argentine weather fails to improve in the next 15-20 days.
- CONAB also lowered its forecast for safrinha corn acreage this morning, thus lowering total crop size, and without near perfect weather in Brazil, and amid rather cheap corn offers at the US Gulf, the market is well positioned to boost its share of world trade even more. US wheat exports were lowered 25 to 950 million, which like beans is a function of pace analysis. The rally in wheat is also working to slow potential export demand rather noticeably, and we’ve mentioned this week the wheat market is not at all being driven by demand. However, this week’s drought monitor showed yet further expansion in extreme conditions across the S Plains, and the major forecasting models are not in agreement on the potential for isolated showers in OK and KS in late February.
- World crop ending stocks were lowered across the board. As expected, USDA cut Argentine corn production 3 million mt to 39 million mt, and additional cuts lie in the offing. Brazilian corn production was left alone. Brazilian bean production was raised 2 million mt, which is completely offset by a 2 million reduction in Argentina. Chinese imports are unchanged at 97 million mt, vs. 93.5 last year. Total S American production is pegged at 166 million mt, vs. 172 last year.
- Price action today makes clear the market is more concerned about La Niña-based drought in the US, Argentina and S Brazil, and that safrinha corn seedings this morning was lowered 700,000 hectares places more burden on Apr-May rainfall in Central Brazil. We maintain that price breaks are buying opportunities amid less than ideal world weather patterns, and as the macro landscape is relatively improved compared to recent years. We estimate that managed funds this afternoon are still short 95,000 contracts of corn, 97,000 contracts of wheat and 30,000 contracts of soybeans.
To download our USDA update as a PDF file please click on the link below: