Market Analysis

The USDA returned to its traditional approach of limited changes in their March US and World supply & demand levels as many in the trade had expected. Despite a slight increase in South America’s soybean (SOYB) output & a 3 mmt jump in Australia’s wheat (WEAT) crop, the World Board left the 3 major US crop ending stocks unchanged and only made some modest adjustments in their World ending supplies this month.

Despite the recent strength in the US domestic crush (5 records in last 5 months), the USDA decided to leave this demand unchanged. They also left the US bean export forecast the same after last month’s increase. However, they increase the US seed usage by 1 million while dropping the residual by 1 million bu after last month’s higher Ag Forum seedings. The USDA did adjust their South American crop sizes this month. They upped their Brazilian outlook by 1 mmt to 134 mmt while they sliced 500,000 tons from Argentina’s potential to 47.5 mmt because of the current dryness across the country. These adjustments only upped the World’s stock by 380,000 tons to 83.74 mmt which still remains 12.3 mmt lower than last year.

In corn (CORN), the World Board also kept its 2020/21 US ending stocks unchanged. Despite a recent dip in US ethanol output because of cold weather, the expansion of US COVID vaccinations and reports of an ethanol shipment to China left this usage unchanged. US corn exports were also stable this month, but the USDA did increase China’s wheat feeding level by 5 mmt which is a bit negative for corn’s foreign demand. The upcoming March 31 quarterly stocks will be barometer on corn’s 2nd half feed demand. Brazil’s slow bean harvest and late safrina corn plantings (73% vs 91% 5 yr average) remain corn’s biggest production unknown over next 8-10 weeks.

Similar to corn and beans, the USDA left wheat’s US balance sheet unchanged. Export sales are ahead of last year, but weekly shipments need to average 23 million to hit its 985 million estimate. The US dollar value could be the factor if wheat hits or misses its goal.

What’s Ahead

US & South American weather along with the world’s ability to ramp up COVID vaccinations will be the main grain market factors.

With the Northern Hemisphere’s spring around the corner and prices near longer-term resistance levels of $5.50-$6.00 in corn, $6.50-$7.00 in wheat, & $14.00-$14.50 in soybeans, be sure old-crop sales are at 90-95% & new-crop marketings are 20-25% of a conservative yield at this time.