Bearish news for corn

By Doug Tenney, Leist Mercantile

Corn stocks less than expected but acres of 97 million acres were above the high end of expected.

The March 31 reports included quarterly grain stocks and U.S. acres estimates for 2020. It did NOT have supply and demand tables for grains. Those will be out with the April 9 WASDE Report.

Shortly after the USDA report was released, corn was down 7 cents, soybeans down 3 cents, and wheat down 3 cents. Just before the noon report, grains were mixed with corn down 1 cent, soybeans up 3 cents, and wheat up 3 cents.

Quarterly grain stocks will be the focus today as corn stocks easily captured the most attention. For months various industry and producer reports indicated last year’s corn quality was below average as numerous areas harvested light test weight corn. There is above average concern holding corn with questionable quality could be treacherous into the summer months.

USDA put March 1, 2020 corn stocks at 7.95 billion bushels, soybeans 2.25 billion bushels, and wheat 1.41 billion bushels.

Traders will be watching closely the price action after the noon report release. In past years, this report date has seen sizeable price swings. Trade volume the last several weeks has been declining which could easily produce those sizeable price swings.

Prior to the report, trader average estimates had March 1 corn stocks at 8.125 billion bushels, last year corn stocks were 8.613 billion bushels. Trader average estimates of soybean stocks March 1 were 2.241 billion bushels, last year they were 2.727 billion bushels. The average estimate for wheat stocks was 1.432 billion bushels, last year wheat stocks were 1.593 billion bushels.

Today, USDA said there would be corn at 97.0 million acres, soybeans 83.5 million acres, and all wheat 44.7 million acres.

Trader average estimates had U.S. corn acres at 94.3 million acres, soybeans 84.6 million acres, with all wheat at 44.9 million acres. In 2019, a weather delayed planting season had U.S. corn acres at 89.7 million acres, soybeans 45.1 million acres, and all wheat at 45.0 million acres.

At the end of February, May CBOT corn closed at $3.6825, May CBOT soybeans $8.9275, and May CBOT wheat was $5.25. Monday’s close had May corn at $3.4125, May soybeans $8.8225, and May wheat $5.695.

Last week Russia put a quota on April, May, and June wheat exports of 7 million tons. Earlier, it had been expected 8 to 10 million tons would be exported in that same period.

Weather emphasis will increase in coming weeks with spring planting just around the corner. The southern U.S. Corn Belt could see less rain in the coming week compared to forecasts several days ago. Also, both the Brazil and the Black Sea are dry.

In the past two weeks, both soybeans and wheat have seen price rallies from their March 16 lows. Soybeans have captured attention with China soybean and soymeal supplies tight. Brazil has roughly 12 million tons of soybeans on the water headed for China. In addition, with less corn crushed for ethanol and DDGS, it has pushed soybean crushers to be more aggressive in securing soybeans to produce soymeal. Soybean crushers certainly want to have product available to take up the slack of less protein in the form of DDGS. Also, wheat flour millers have been actively securing wheat to order to have plentiful supplies in order to keep flour on the store shelves.

Weather forecasting could be somewhat hampered in coming weeks. Less commercial airliner traffic into Europe means those data points normally collected from the atmosphere are not available. The GFS model could be more reliable than the EU model since the EU model takes those airline data points into account.

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