- HEADLINES: March USDA report a carbon copy of February; Chicago declines and recovers as traders point to speculative position bump next week; awaiting CONAB Thursday.
- The March USDA crop report failed to offer any excitement with Chicago futures in decline on liquidation. Historically, the USDA is passive in March due to the more important Stocks/Seeding Report that is due on March 31. However, this month’s report was ultra-passive with the USDA not making any change to US 2020/21 corn, soybean, or wheat balance sheets. The biggest change was USDA raising their estimate of the Brazilian soybean crop by 1 million mt to 134.0 million.
- The Brazilian soy crop increase was partially offset by a 500,000 mt decline to 47.50 million mt of Argentina. Brazilian farmers would argue with USDA’s soy crop increase, due to excessive rainfall across N Brazil and dryness for RGDS. However, the market must now await the expansion of Chicago speculative limits that starts Monday along with N Hemisphere weather to push Chicago price upwards. Our advice is to use the break to position for a spring rally. The cash market is tightening with farmers unlikely to sell stored crop on a break
- The USDA left US corn 2020/21 corn end stocks at 1,502 million bu choosing not to raise exports or alter feed/residual use. The average on farm price held at $4.30 on the completely unchanged balance sheet. Surprisingly, the USDA left the Argentine corn crop at 47.50 million mt and the Brazilian corn crop at 709 million mt. USDA was willing to trim the Argentine soy crop by 1%, but left corn unchanged. 2020/21 world corn end stocks were cut 1 million to 286 million mt, while China’s imports held at 24 million mt. The world corn balance sheet is about as boring a monthly report as can be produced.
- US 2020/21 soybean end stocks held at 120 million bu with exports of 2,250 million bu and crush at 2,200 million bu. The USDA tweaked its residual by 1 million bu with seed use raised 1 million bu to 104 million bu. This compares to 96 million bu of seed last year, an 8% increase. If seeded acres were raised by a like amount, it would boost seedings to a record large 90.4 Mil acres. Such acres would be slightly above the USDA 2021/22 balance sheet. The average farm price holds at $11.15.
- US 2020/21 soyoil stocks rose by 19 million pounds to 1,733 as biodiesel use held steady at 8,300 million pounds. US soyoil exports were lowered by 150 million pounds while production rose on a better oil yield of 11.65lb/bu. We look for another 200 million pound decline in US soyoil exports as the discount of palmoil to soy widens. The US soyoil balance sheet is slightly bearish.
- US wheat end stocks were steady at 836 million bu, but USDA raised white wheat exports and cut HRW based on pace analysis. US HRW wheat end stocks rose to 383 million bu (up 21 million from February) while white stocks fell 19 million bu to 64 million bu with SRW wheat stocks falling 1 million bu to 99 million bu. There are rumours today that China is seeking modest tonnages of US SRW wheat.
- The midday GFS weather forecast is drier than the overnight run for Argentina/S Brazil. The forecast offers virtually no rain for the next week (into March 16) with a weak cold front to produce a few widely scattered thunder storms. Rain totals are estimated in a range of 0.1-0.8″ with coverage reduced to 35% of the area. Such rain following weeks of dryness is not going to produce much benefit for Argentine yield/crops. High temperatures look to range from the 80′s to the mid-90s, warmer than normal into March 17.
- The GFS forecast is wet for Northern Brazil with rains of 3-6.50″ forecast. And the 10-15 day period is especially wet for N Brazil with another round of heavy rain. The rain will further slow harvest and the seeding of winter corn.
- The USDA March report produced the expected Chicago price break as bullish news was lacking. Price direction will be determined by S American weather/yield, new speculative inflows (start Monday), and tightening US cash markets. This is a commercial marketplace with spec longs not changing very much week-to-week. We look for a rally effort into the March 31 NASS report on the need for record large/combined US corn/soy seeding. S American weather remains concerning which should produce lower crop totals in April/May. Buy breaks, but a sustained Chicago rally will now have to wait until April.