Floor Talk, March 8, 2019 (Report Day)
At midsession, the May futures are 3/4¢ lower at $3.64. July futures are 1/2¢ lower at $3.73.
May soybean futures 4 3/4¢ lower at $8.97 3/4. July soybean futures are 4 3/4¢ lower at $9.11 3/4.
May wheat futures are 1 1/4¢ higher at $4.39.
May soymeal futures are 1.00 per short ton lower at $305.30. May soy oil futures are 0.11 lower at 29.56¢ per pound.
In the outside markets, the NYMEX crude oil market is $1.47 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 162 points lower.
U.S. Ending Stocks
In its Supply/Demand and WASDE Reports, the government agency estimated the U.S. 2018/19 corn ending stocks at 1.835 billion bushels vs. the average trade estimate of 1.75 billion bushels and the USDA’s February estimate of 1.735 billion.
For soybeans, the U.S. 2018/19 ending stocks were estimated at 900 million bushels, vs. the trade’s expectation of 898 million and the USDA’s previous estimate of 910 million bushels.
The USDA pegged the U.S. 2018/19 wheat ending stocks at 1.055 billion bushels vs. the average trade estimate of 1.02 billion bushels and the USDA’s February estimate of 1.01 billion.
World Ending Stocks
On Friday, the USDA pegged the World 2018/19 corn ending stocks at 308.5 million metric tons vs. the trade’s expectation of 309.1 million metric tons and the USDA’s February estimate of 309.8 mmt.
For soybeans, the world 2018/19 soybean ending stocks were pegged at 107.1 mmt. vs. the trade’s expectation of 106.3 mmt. and the USDA ’s February estimate of 106.7 met.
In its report, the USDA pegged the world’s 2018/19 marketing year wheat ending stocks at 270.53mmt. vs. the trade’s estimate of 267 mt. and the USDA’s previous estimate of 267 met.
South America’s Crop Estimate
The USDA pegged the 2018-19 Brazilian soybean output at 116.5 million metric tons vs. the trade’s expectation of 115.4 mmt. and the USDA’s February estimate of 117.0 mmt.
Argentina’s soybean output, for this same year, is pegged at 55.0 mmt. vs. the average trade estimate of 55.2 mmt. and the USDA’s February estimate of 55.0 mmt.
Brazil’s 2018-19 corn output is pegged at 94.5 mmt. vs. the trade’s expectation of 94.6 mmt. and the USDA’s February estimate of 94.5 mmt.
Argentina’s 2018-19 corn output, the USDA estimates it at 46.0 mmt. vs. the trade’s expectation of 46.0 mmt and the USDA’s February estimate of 46.0 mmt.
What say you?
--Britt O'Connell, Commodity Risk Management Group cash advisor, says that the USDA’s corn ending stocks were raised 100 million bushels to 1.835 billion.
“The report shows reductions in corn used for ethanol production as well as reduced exports. No large surprises here as the market seemed to expect both of these,” O’Connell says.
Ethanol margins have been slim to negative for the 2019 year thus far, O’Connell says.
“The U.S. was able to pick up Argentina's share of corn exports last year, as it suffered a tremendous drought. With both Brazil and Argentina expected to have great corn crops, they will likely take back their share of exports. We are also a little less competitive on a global scale than we had been at the beginning of the year,” O’Connell says.
In the report Friday, soybean ending stocks dropped slightly to 900 million bushels, a drop of just 10 million.
“Crush margins had continued to be healthy resulting in an increase by 10 million to this space. At some point, the USDA has to adjust exports on soybeans unless a miracle deal comes thru with someone to buy. It (USDA) has been kicking the can down the road on this for months. Maybe it knows something we don't. Still leaves beans vulnerable - net/net. Nothing big by way of changes or surprises. Corn is testing lows from last week..let's hope they hold."
--Jack Scoville, PRICE Group, says that the USDA Report sparked an interesting market reaction.
“The numbers were bearish no doubt about it, but the reaction was very measured. There is no reason to buy anything based on the USDA estimates, as demand was cut in a lot of places. But the speculative traders are already so short that the market could not react much. Might be a sign we are running out of sellers and need to pop things a bit in the next couple of weeks,” Scoville says.
--Jason Roose, U.S. Commodities, says that the Crop Production report provided no bullish surprises.
“The surprise was the 25 million bushel reduction in ethanol usage and the 75 million bushel reduction in exports which increased the corn ending stocks to 1.835 billion. Crush was up 10 million for the soybeans which was friendly for demand but the ending stock figure still unable to break the 900 million level, which is still considered bearish limiting rallies,” Roose says.
In early trading, the May futures are 1/4¢ higher at $3.65. July futures are 1/2¢ higher at $3.74.
May soybean futures are 3 1/4¢ lower at $8.99 1/4. July soybean futures are 3 1/2¢ lower at $9.13.
May wheat futures are 2 1/2¢ higher at $4.40. May soymeal futures are 0.70 per short ton lower at $305.60. May soy oil futures are 0.12 lower at 29.55¢ per pound. In the outside markets, the NYMEX crude oil market is $2.03 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 168 points lower.
Private exporters reported to the U.S. Department of Agriculture export sales of 664,000 metric tons of soybeans for delivery to China during the 2018/2019 marketing year.
The marketing year for soybeans began Sept. 1.
Al Kluis, Kluis Advisors, says that investors will be watching today’s CFTC Report for market direction, going forward.
“Funds continue to pile on the short positions; the wheat market just cannot find any support. The path of least resistance has been lower lately. Until the wheat market can find some support, the corn market will continue to drift lower,” Kluis told customers in a daily note.
He added, “Since ending the government shutdown, the Commitments of Traders reports have been on a staggered release schedule to get caught up. The report released at 2:30 pm CT today will be get us up-to-date and provide the most current positions. How short will the funds be on corn and soybeans."