USDA offers few changes and several yawns in report

Yawn.

Today’s report was pretty boring, a few changes, nothing major. No big price movements followed this report.  Corn ending stocks were lowered 50 million bushels to 1.827 billion bushels. Corn for ethanol was increased 75 million bushels but feed demand was lowered 25 million bushels.  Ending stocks for corn were less than traders had expected. That along with higher ethanol numbers is a small positive. Soybean ending stocks stand at 385 million bushels, down 25 million bushels from January. Crush was increased by 15 million bushels while soybean exports went up 20 million bushels.  Soybean imports went up by 10 million bushels. US ending stocks at 385 million bushels would be a positive. Brazil’s soybean production was lowered by one million ton to 94.5 million tons. That decline was offset by higher production from Argentina of one million tons to 56 million tons.  Wheat ending stocks were up 5 million bushels to 692 million bushels.

Traders were looking at this report to be of little consequence for grain prices. Ending stocks for soybeans were expected to drop slightly from the January report.  Demand for soybeans could be up slightly for exports and crush. Both corn and wheat ending stocks were expected to be virtually the same as those from January.  South America soybean production will be closely watched with the consensus expecting Brazil to be down while Argentina should be up. Weather is a huge factor in those changes with portions of Brazil being dry during much of the soybean growing season.

Prior to the report grains were all lower. Corn was down 3 cents, soybeans were down 5 cents, and wheat was down 3 cents.  Soybeans did trade on both sides of Monday’s close following the report.  Shortly after the report was released corn was down 1 cent, soybeans were up 1 cent, and wheat was down 6 cents.

Producers are still talking about the 2014 corn acres and production that were final numbers last month. Many had expected USDA to reduce corn acres due to the larger than normal discrepancy from NASS corn acres to FSA corn acres. That difference was near 4.5 million acres. The reality was that acres were changed very little with the January report.  Unless the marketing year ending stocks on August 31, 2015 are sharply below expectations, look for no additional acreage revisions for 2014 this fall.

Last month’s quarterly stock report revealed a record amount of corn in the US as of December 1st at 11.202 billion bushels. Producers hold the vast majority of that corn, 7.087 billion bushels in their bins, much of it still not sold.  They remain tight fisted, hoping to see prices near the $4 mark to move additional bushels prior to spring planting.

Farming in Ohio and the United States is vastly different today compared to several years ago. Gone are the huge returns per acre seen in past years. Corn was king, it returned a lot of money for producers. Balance sheets improved, equipment was bought to update older fleets, and bank accounts grew larger. Net farm income in the United States grew to 130 billion in 2013, up sharply from that seen in 2010 of 78 billion dollars. Fast forward to today when net farm income for 2014 is projected to be near 96 billion dollars. The front number for corn has changed to 3 compared to 5 to 8 seen several years ago. Corn is still king on U.S. farms, but for many U.S. producers, corn per acre returns are greatly reduced or even negative for 2015.

Upcoming reports yet this month will be the USDA outlook conference on February 19 and 20. Next month’s planting intentions report on March 31 when USDA provides their estimates for 2015 corn and soybean acres.

Currently U.S. weather is warm in the east, cold in the east.  Ohio is seeing less snow than last year. The extended U.S. Midwest forecast is for normal temperatures and precipitation. The U.S. summer forecast looks to be dry in the northern plains with normal rain for the rest of the Corn Belt.

In the coming weeks traders will focus on weather and the soybean harvest from South America, the upcoming USDA outlook conference, and farmer movement.  The lack of farmer selling has played a big role in corn prices moving higher this past week. With March CBOT corn at $3.90, it is 24 cents above the recent lows at $3.65  ¾ on Jan. 30.

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