Market Analysis

The USDA again provided surprises in both March 31 US planting intentions & quarterly stocks report. However, they were different than the last-minute whisper ideas that broke prices into the USDA numbers. The producer survey revealed lower than expected corn and soybean plantings while this year’s US winter wheat seeding were revised up 1.09 million acres from January’s initial Ag Dept. update. Both, US soybeans and wheat (WEAT) quarterly stocks were modest higher than trade expectation, but corn’s March 1 stocks were lower than expected. Overall, the reduced corn (CORN) and soybean (SOYB) planting levels prompted an immediate price jump. Concerns about 2021 US output being enough rallied these two crops to their daily limits of 25 and 70 cents.

Corn’s 91.14 million 2021 survey level was 2.06 million below expectations, but only 327,000 higher than last year. Higher winter wheat (850,000) and sorghum in the S Plains, higher fertilizer costs and last year’s poor corn on corn yields seemed to be the reasons for the limited growth in corn’s area. Soybean plantings jumped 3.1 million acres in the WCB’s intentions with 2.0 million coming from the Dakotas while the ECB is projected to provide 850,000 more acres of the survey’s 4.5 million larger bean seedings. However, this level was 2.4 million acres below the trade’s 90 million average 2021 planting estimate.

The USDA’s corn quarterly stocks caught the trade’s eye. Corn’s 7.7 billion bu. stocks was modestly below expectations, but this stock level implies corn’s feed demand rose 110 million bu. from 2020’s usage level to 1.43 billion bu. Overall, this is record first half demand of 4.185 billion bu. This is 74% of the current USDA yearly feed forecast of 5.65 billion bu. This pace is below 2010/11’s 75.6% Sept to Feb level, but price ratioing seems needed to attract wheat feeding to slow this usage. Recent Chinese buying will likely tighten corn’s stocks by 200 million in April’s balance sheet. 

Soybeans March stocks of 1.564 billion bu were 30 million higher than expected. This puts the current residual at 15 million bu. suggesting 2020’s crop may be underestimated.

What’s Ahead

With the latest US corn and soybeans producer survey planting levels suggesting smaller output and tighter 2021/22 balance sheets, US weather conditions have now become more important. The USDA will utilize the current seeding levels in their 2021/22 S&Ds, but they won’t issue these numbers until their May report. The April 9 updates will only be on US 2020/21 ending stocks.

Hold sale levels for now.