Market Analysis

The next monthly USDA output and supply/demand report will be released on March 9. The World Board traditionally hasn’t made many changes in their US & World S&D updates this month. The Ag Department usually likes to see its quarterly stocks and processing reports later this month before adjusting their domestic demand levels. This year’s South American growing season started late because of dryness. It delayed Brazil’s northern soybean plantings to the lowest rate in a decade and impacted Argentina’s corn and soybeans potential this crop year. Rains have returned in Brazil further slowing the northern bean harvest. This could impact Brazil’s large safrina (second) corn crop, particularly if this region’s dry season begins in April vs. mid-May or later. This makes South American output quite important to world prices going forward.

In soybeans (SOYB), the current US crush is 19 million bu ahead of the seasonal pace to hit the USDA’s current 2.2 billion rate. This suggests this domestic demand could be upped 15 million bu. With the bulk of South America’s harvest still ahead, no change in US exports is expected, but higher US imports (10 million) later this year could limit this month’s drop in ending stocks to 115 million bu. (- 5 million).

Last month’s extremely cold and snowy US weather did impacted the Midwest biofuel plants and US fuel demand. However, the improving economic outlook from higher vaccinations should let the USDA keep its corn ethanol demand unchanged this month. With US corn export shipments needing to average 59 million bu. per week the balance of the year, the USDA shouldn’t change this demand either. With no quarterly stocks update until March 31, no feed demand adjustment is expected this month. Overall, corn’s (CORN) ending stocks could remain at 1.502 billion bu.

Recent cold weather damaging the US wheat (WEAT) crop are circulating. However, US weekly wheat export shipments need to average 23 million bu, the highest rate since 2010/11. This suggests exports could be lowered by 20 million raising US stocks to 856 million bu. (not pictured).

What’s Ahead:

Brazil’s soybean harvest is advancing towards 50% completion. With the market looking for a possible hot & dry weather stress in Argentina or for the USDA to further tighten US old-crop ending stocks, the trade needs a bullish punch to up prices. However, the USDA might not deliver.

Use current May bean prices to advance sales to 90% similar corn & wheat levels. Hold new-crop at 20% at this time.