Floor Talk March 8 (Report Day)

[Tony_Dreibus]

USDA SAYS:

U.S. Data
In its March Supply/Demand Reports, the USDA pegged the U.S. 2017/18 corn carryout at  2.172 billion bushels, compared with the average trade estimate of 2.312 billion bushels and its February estimate of 2.352 billion.

For soybeans, the U.S. 2017/18 carryout is estimated at 555 million bushels vs. the average trade estimate of 530 million bushels and the USDA’s February estimate of 530 million.

USDA pegged the U.S. 2017/18 wheat carryout at 1.034 billion bushels vs. the average trade estimate of 1.015 billion bushels and its estimate last month of 1.009 billion bushels.

South American Production
In its report Thursday, the USDA pegged the Argentine 2018 soybean production at  47.0 million metric tons, compared with the average trade estimate of 48.36 million mt. and the USDA’s February estimate of 54.0 mmt.

Brazil’s soybean output is pegged at 113.0 million mt. vs. the average trade estimate of 113.82 mmt. and USDA’s estimate last month of 112.0 mmt.

The USDA sees Brazil’s 2018 corn production at 94.5 mmt. vs. the average trade estimate of 92.22 mmt. and USDa’s February estimate of 95.0 mmt.

Argentina’s corn crop is estimated at 36.0 mmt. vs. the average trade estimate of 36.58 mmt. and the USDA’s February estimate of 39.0 mmt.

What say you?

TRADE REACTION:

--USDA would have needed to print a Argentine soybean number of 46.0 or 45.0 mmt. to really make the market-move interesting.

--USDA raised U.S. corn exports up 175 million bushels, a very friendly move.

--USDA dropped U.S. soybean exports by 35.0 million bushels, not so friendly.

--Still, there is just a lot of world wheat. Analyst believes that will keep a cap on corn rallies.

--Sal Gilbertie, Teucrium Trading owner, says that the combined effects of higher U.S. corn exports and increased demand for ethanol production on the projected U.S. corn balance sheet supported corn prices after today’s report.

"Some in the trade were surprised by the amount of corn exports estimated for the old crop year, which probably contributed to much of today’s price increase. Attention will turn to the acreage report, at the end of this month, to see if corn prices manage to allow corn to keep more acreage than anticipated vs soybeans in the coming year," Gilbertie says.

--Brian A. Rydlund, CHS Hedging Market Analyst says that the USDA report is friendly for corn, neutral for soybean market, and bearish for wheat.
CORN =No changes to supply side of things. Demand for ethanol up 50 mil bushels and is acceptable. The corn exports up 175 mil bu, so carryout cut accordingly 225 mil bu. to 2.127 bil bu.
The avg farm price, for corn set at 3.15-3.55, up 10c on low end.
 
SOYBEANS= No changes on supply side. Soybean crush raised 10 mil bu., exports cut 35 mil bu., so carryout up 25 mil bu. The trade thought carryout would go up and both adjustments are reasonable.       The avg farm price, for soybeans, at 9.00 – 9.60 per bushel, up 10c on both ends.  
 
WHEAT= No good news, no supply changes, exports cut 25 mil bu. and that went right to carryout           that goes up 25 mil bu. to 1.034 bil bu. Anytime that we have a billion bushels, we have plenty. 

--Jason Ward, Northstar Commodity Research:

Corn

The best analysis of the USDA report came out of the U.S., not South America. USDA increased the corn used for ethanol figure by 50 million bushels to 5.575 billion bushels, and they also increased the corn exports by another 175 million bushels, a total increase in domestic corn usage of 225 million bushels. All of that came off the ending stocks which are now 2.127 billion bushels. This now gives us a very legitimate chance with similar acres to last year and trend line yields to take corn ending stocks below 2 billion bushels in 2018/2019. We’ll see about the acres for 2018 yet, but this increase in domestic usage should continue to bring MONEY FLOW into the market.

World Corn Ending Stocks

199.2 MMT, finally cracking 200 MMT and we did so with a very small decrease in the Brazilian corn crop at 94.5 MMT, only down 0.5 MMT

Argentine corn was reduced by 3 MMT from 39 MMT to 36 MMT. The Argentine number was 0.6 MMT below trade estimates while the Brazilian estimate was 2 MMT above trade estimates, but the big decline in the US supply lead to the world carryout numbers falling finally below 200 MMT.

Realistically, with a record amount of corn acres in Brazil planted after March 1^st, we could see more downside to the Brazilian corn crop, but for Feb and March USDA has chosen to move very slowly compared to the private sector.

US Soybean Analysis

USDA cut exports again by 35 million bushels, but increased crush by 10 million bushels, so US supplies increased to 555 million bushels. Nothing friendly about this number, it came in 25 mil/bu above trade estimates

So, here is the World Supply scenario for soybeans, which was supportive. Brazil’s soy crop only went up to 113 MMT, up 1 MMT from last month’s 112 MMT and below last year’s record of 114 MMT. This is below nearly every trade estimate, and some were as high as 118 MMT, so friendly in the sense that it did not rise as much as expected.

Argentine soy was 47 MMT, down 7 MMT, a sizable move to the downside for USDA standards. This was viewed as supportive even though we have seen 44 MMT from many private sectors, this could just be the first major decline by USDA with more to come in April, especially if we finish this month of March in a below normal precip pattern.

World soy ending stocks came in at 94.4 MMT, down 3.7 MMT from last month. So, even with more domestic supplies of soybeans, this is a world and we have less soybeans in the world than last month. This will keep the length in the soybean market as long as there is expectation of lower production numbers in coming reports out of Argentina.

There is also some “doubt” now that maybe USDA is cutting US exports by too much. We might have seen the highest domestic number of soybeans that we will get at 555 million bushels. We NEED to keep seeing strong crush numbers and good exports in the coming weeks.

Wheat

US supplies rose 25 million bushels to 1.034 bil/bu, exports were cut by 25 mil/bu. Nothing supportive here

World Ending Stocks of wheat came in at 268.9 MMT, up 2.8 MMT from last month, also nothing supportive

The US will likely remain non-competitive in the export market going forward and upside will depend on spec movement out of short positions and acreage abandonment in the S. Plains.

--

Mike

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At the close:

At the close, the May corn futures settled 6 1/2¢ higher at $3.93 1/2. July futures finished 6¢ higher at $4.00 1/2. May soybean futures ended 1 1/4¢ lower at $10.64.  July soybean futures settled 1¢ lower at $10.73. May wheat futures closed 2¢ higher at $4.99 1/4. May soy meal futures finished 0.10 per short ton lower at $383.40. January soy oil futures finished 0.26 lower at 31.84¢ per pound.  In the outside markets, the NYMEX crude oil market is $0.94 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 43 points lower.

Mike

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At 12-Noon:

At 12-Noon, the May corn futures are 4 1/2¢ higher at $3.91. July futures are 4¢ higher at $3.98. May soybean futures are 6 1/2¢ lower at $10.58.  July soybean futures are 6 1/2¢ lower at $10.67. May wheat futures are 2 1/2¢ lower at $4.94. May soy meal futures are 0.70 per short ton lower at $382.80. January soy oil futures are 0.22 lower at 31.88¢ per pound.  In the outside markets, the NYMEX crude oil market is $0.62 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 21 points lower.

Mike

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At 9:10am:

In early trading, the May corn futures are 1/2¢ higher at $3.87. July futures are 1/2¢ higher at $3.95. May soybean futures are 1/4¢ lower at $10.65.  July soybean futures are 1/4¢ lower at $10.73. May wheat futures are 4 3/4¢ higher at $5.01. May soy meal futures are even per short ton at $383.50. January soy oil futures are 0.08 lower at 32.02¢ per pound.  In the outside markets, the NYMEX crude oil market is $0.28 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 112 points higher.

Mike

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Soybeans were lower overnight on declining palm oil prices and corn and wheat were moderately lower ahead of today's WASDE. Fundamentally nothing has changed since yesterday -- it's still dry in Argentina and the US southern Plains, which likely will underpin prices regardless of what happens in the report. Speaking of which, the USDA is expected to lower its carryout estimate for both global corn and global soybean inventories versus last month's projections, according to analyst surveys. In weather news, more rain is on the way for parts of Arkansas, Mississippi and Tennessee where rivers and streams are already out of their banks. Another 3 inches may fall Sunday, which would exacerbate the flooding, according to the National Weather Service. Get all the details in today's 3 Big Things at https://www.agriculture.com/news/three-big-things/3-big-things-today-march-8.

Brent Crude Oil = down 0.4%.

West Texas Intermediate = down 0.1%.

Dollar = down 0.1%

Wall Street = U.S. stock futures higher in pre-market trading.

World Markets = Global stocks higher overnight.

[roarintiger1]

Price wise, I certainly don't expect any help for higher prices from this report.   I would guess that they will be very slow in lowering the Argentina crop.  They will however, increase the Brazilian crop.   They can't let the markets get too crazy......you know, keeping the food supply inexpensive.

[northnd]

One thing about USDA reports. They have become a good marketing tool. Invariably they are a negtative market mover. Trade starts adjusting to them a day or two beforehand. I try to sell my crop throughout the year in small lots on upticks. I certainly position some of these small lots BEFORE USDA reports that tend to artificially control the market in the negative direction. Sure once in a while there are small positive surprises but they are few and far between. Just like my sales:-)

[northnd]

Strike that last sentence. I meant large number of sales positioned between reports. Haven’t had enough coffee this morning;-)

[cborman11]

Gotta get there prices lower can't have farmers making money here. Farmers aren't in it too make money just so everyone else does,oh wait that's how it is now.