USDA March Crop & Supply & Demand Updates
Market Analysis
The USDA resumed to its longer-term trend of minimal changes in their US and World supply & demand levels during March as many in the trade were expecting. Under the expanding Coronavirus world health issue and China’s modest start to its Phrase 1 trade commitments, the World Board left the 3 major US crop ending stocks unchanged and only made some very modest adjustments in their World ending supplies this month.
Despite the recent strength in the US domestic crush (3 records in last 4 months), the USDA decided to leave this demand unchanged. They also left bean exports the same after last month’s increase. However, the USDA upped both Brazil’s & Argentina’s crop sizes by 1 mmt to 126 and 54 mmt. Yields were increased, but they sliced 500,000 hectares from Argentina’s area possibly on the current conflict over higher export taxes in that country. These increases upped soybean world stocks to 102.4 mmt, but this level remains 9 mmt below this year’s beginning stocks. No change was made in China’s 2019/20 imports at 86 mmt.
In corn, the World Board kept its US 19/20 ethanol usage unchanged this month, but reports of Chinese DDGs purchases and interest in ethanol suggest this domestic demand could be on the rise. US exports were also stable this month, but Chinese interest in this feed grain is needed to hit the USDA’s outlook. The upcoming March 31 quarterly stocks is the barometer on corn’s late-season quality issues and its 2019/20 feeding level. Brazil’s large safrina crop and dryness in Argentina keeps S America’s corn output vulnerable for losses over the next 6-8 weeks after the USDA left these crops unchanged at 101 and 50 mmt.
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 bushels to hit 1 billion. The value of the US dollar will be the factor if wheat hits its goal.
What’s Ahead:
US & S America weather along with the world’s ability to slow & control COVID-19 will be the main market factors going forward. Hopefully, a better understanding of this coronavirus will reduce the emotions & reduce its impact on people and the markets. Still looking to utilize May strength to advance corn & soybean sales 20% at $3.88-92 & $8.98-$9.10 and 15% of your new-crop at $3.97-$4.00 & $9.30.
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 any futures brokerage firm or its ...
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And it may or may not play out this way but the more factoring I do the more iv see a monster squeeze coming to the wheat market. Last time was right after the financial crisis as grain prices locally went from 4 dollars a bu to 20. Durum ran from 4 to 30 a bu! It's looking like it's in the cards again.
and that's just the start. Australia had it's worst crop since 08 not getting as much planted Africa having another drought and locust issues major. China shut down and trying to get started back up and get chemicals shipped out. Countries locking down. Urea and 1152 issues getting to Farmers. US Farmers lowest winter wheat acres in a long time. If they can get all the needs to get a spring crop in if the country shuts down and into the seeding season. That will not be good. US crop was much worse that reported all year. If the world has to turn to organic and not be able to get ferts and chemicals that would take the production down by 2/3rds. Not good. Countries will have an all out bidding war for food. Wheat for sure.
USDA has been so far off. Can't believe anything they have to say. Wheat is going to sky rocket in the next couple months. Demand is crazy high right now. Countries will be stocking up to prevent it's citizens from starving