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Will March move markets?

March is a huge month for USDA reports. Today’s March 8 monthly Supply and Demand Report expectations suggest corn exports could increase even more. Last month USDA pegged U.S. corn exports at 2.050 billion bushels, an increase of 125 million bushels. Conversely, private estimates suggest U.S. exports could drop even more in the months ahead. USDA estimated soybean exports in February at 2.10 billion bushels, down 60 million bushels from the previous month. That decline pushed soybean ending stocks to 530 million bushels, a jump of 60 million bushels. Yet, report day in February failed to push soybean significantly lower compared to previous years when soybean ending stocks had that much of an increase. Instead, dry weather concerns in Argentina were the feature that day, overshadowing the bearish news. A decades old analogy suggests that when bearish news does not produce bearish price results, the news event is no longer relevant.

March 29 will be another day of significant USDA reports. That day USDA will release the annual Planting Intentions Report. Corn acres will likely decrease from 2017 while soybean acres should see a small increase. The quarterly grain stocks report will also be reported that day.

Weather dominated the market news for much of February, continuing that trend into March. Unlike past years when the weather concerns were primarily in just one region, this year it comes at us from two arenas. First, the U.S. Plains have been dry for months. Late February weekly crop ratings reported further declines in winter wheat conditions, helping to push wheat prices higher.

Second, Argentina experienced February  temperatures in the 80s and 90s with rainfall sorely lacking. Some rated Argentina  as having the driest February in decades. While Argentina continues to a major soybean producer, its production is half of what is produced in Brazil. So why all the jitters and attention? Argentina is clearly the world’s largest exporter of soymeal as it accounts for nearly half of the world’s soymeal exports. Soybean storage in Argentina is vastly different than that of the US. Argentina stores the vast majority of its soybean production in storage bags, similar to those used fo corn silage. Soybean quality can be lacking as Argentina’s producers often have nearly two years of production stored on the farm.

Argentina soybean production estimates are currently all over the board. Last month USDA estimated their soybean production at 54 million tons. Private estimates are near 44 million tons while others suggest it could even fall below 40 million tons. USDA had the Argentina corn production last month at 39 million tons. Private estimates suggest the number could drop to 33.5 million tons. Dry weather in Brazil delayed their normal acreage of corn. Those acres were pushed to later season plantings, often resulting in lowered production. The corn production declines in Argentina and Brazil will result in the U.S. being the world’s dominant corn exporter for two to three months longer than had been expected last fall. Those declines played a significant role in U.S. corn exports increasing.

Producers finally had some encouraging news last month as corn jumped 12 cents in February, soybeans rose 48 cents, while wheat gained 30 cents. Grains appear to be breaking out of their months’ long decline and sideways action dating back to last summer. Corn demand is on the increase partly due to more corn being fed to livestock. Soybeans have risen due mainly to drought in Argentina. Wheat increases stem from the dry US Plains as well as the colder than normal winter in Russia and Europe. Shipping delays from the Black Sea have also been a factor.

President Trump suggests the US place tariffs on imports of steel and aluminum. Concerns abound that retaliation will soon take place, derailing the U.S. economy, and sending it into a tailspin. U.S. agriculture could easily be caught in the crossfire. Confusion and uncertainty will reduce participation in markets. Grain prices could easily slip further, adding to the U.S. farm income decline seen since 2012.

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