Lower Exports Up Corn & Wheat Stocks, But S. America Crop Limits Soy

Market Analysis 

The USDA had some unexpected surprises on their monthly supply/demand again this month. This time it was some bigger cuts in corn’s and wheat’s demand (primarily in US exports) that prompted this month’s higher than expected 2018/19 ending stocks levels. Interestingly, the USDA did slice this year’s soybean stocks by upping the US crush outlook by 10 million bu., but the World Board’s limited reduction in Brazil’s crop size(-500,000 tons) vs. ideas of 1.5 to 2.0 mmt cut was a bit of a disappointment for many observers.

Despite the USDA slicing 75 million bu. from exports and 25 million from ethanol usage for this month’s 100 million higher stocks, corn prices had a modest recovery after the numbers were released. A 1.25 mmt cut in corn’s ending stocks on higher world feed demand and prices being oversold (20 cents drop in prior 2 weeks) seem to be behind the relatively stable response to negative news. However, more focus on the poor planting situation in the Delta and the SE and excessive snow levels in the WCB; plus improving US/Chinese tariff news are likely needed for a big recovery,.In wheat, the USDA’s 35 million bu. export cut, 5 million lower food and 5 million higher imports on Friday’s update jumped this year’s stocks 30-35 million over the trade's pre-report average. However, the heavy pre-report selling that pressured KC prices 41 cents lower in previous 2 weeks and the modest condition of the US winter wheat crop lead to a slightly higher close. Rumors of 2 mmts of additional Chinese bean buys occurred on Thursday (664,000 tons announced overnight) ahead of the USDA’s balance sheet changes, However, news reports of a possible snag developing over intellectual property & subsidies that may delay the final signing of an agreement past a previously suggested March 27 date limited the soy complex’s upside. 

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Disclaimer: The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of The PRICE Futures Group, any of its ...

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