Grain News – Stocks Taken Before Flooding
The biggest news in the market today is the March USDA planting intentions and quarterly stocks report that was released last Friday. The report caught some by surprise with a bearish bias in the numbers, especially in corn. Corn closed down 17 ½ cents on the day. This is the largest single down day since July 12th, 2017 when nearby corn closed 16 cents in one session.
The USDA Prospective Planting report indicated 92.8 million acres of corn to be planted this spring; surpassing the highest trade guess and up 3.7 million acres from last year. March 1st, corn stocks were 8.6 billion bushels vs 8.3 billion estimated and 8.89 billion last March. This is a 290-million-bushel decline but nearly 300 million higher than the pre-report estimates.
One thing to remember is the surveys were done before much of the major flooding so it will be interesting to see what does happen. Now that this report has been released the focus will move to the weather. The US planting season as well as the pollination of Brazil’s safrinha corn crop. Also, if the fund traders find a reason to cover short positions, it could drive a decent rally given the huge size of their position.
The soybean story was a bit more positive because the increased corn acres means less soybean acres to be planted. The problem is that even with less acres the story of too many soybeans in inventory really doesn’t change much. Also, earlier last week soybeans had already taken a hard hit with large sales coming from the South American growers on weaker currencies in Brazil and Argentina. Growers there sell soybeans in US dollars, so when their currencies fall vs. the dollar, they get more money. Brazil’s currency is down 8% compared to the US dollar in the last 30 days.
Expected planted acres of soybeans in the US was reported at 84.6 million down 4.6 million from last year. The average trade estimate was 86.2 million acres. With the later spring planting season and flooding there could be more soybean acres planted and less corn than what was reported at survey time. Soybean stocks were reported at 2.716 billion bushels up 600 million form last year and 33 million than the average guess. On-farm stocks were 1.27 billion bushels, up a significant 49% from last year. The story here is a lot of soybeans and they are on the farm.
While these numbers were not what the market wanted to create higher prices there most likely will still be opportunities. One thing to keep in mind in our marketing plans that the calendar does dictate some marketing as well. As we move further along, and you still have a bunch of old crop to sell and haven’t done much new crop either it probably makes sense to get some sold. It is probably a good time before planting starts to revisit your marketing plan and targets or at least put a plan together. Let us know how we can help with that.