By Doug Tenney, Leist Mercantile
The report was neutral for corn and negative for soybeans. Brazil soybean production was up one million tons, a small surprise.
It is most interesting to review the market expectations for USDA reports in 2021. Last month, traders were expecting lots of changes with the monthly WASDE Report. That did not happen. The word, “punt,” was used numerous times in comments which followed the February WASDE Report when referencing what USDA did last month.
Conversely, few changes were expected today. The trader’s estimates for corn ending stocks are down 31 million bushels from last month. Trader estimates for soybean ending stocks are down just 3 million bushels compared to February.
Plenty of price volatility has taken place in the past 30 days. Both old and new crop soybeans have made new contract highs. New crop corn made the most new contract highs with the December 2021 or March 2022 CBOT contracts.
Corn ending stocks were 1.502 billion bushels, last month was 1.502 billion bushels. Soybean ending stocks were 120 million bushels, last month was 120 million bushels. Wheat ending stocks were 836 million bushels, last month at 836 million bushels. Soybean crush and exports were unchanged. Corn exports and ethanol were unchanged.
Brazil soybean production was 134 million tons, last month was 133 million tons. Argentina soybean production was 47.5 million tons, last month was 48 million tons.
The average trade estimate for U.S. grains ending stocks were: corn 1.471 billion bushels, soybeans 117 million bushels, and wheat 839 million bushels.
Don’t be surprised to see price volatility the balance of the month ahead of the March 31 Prospective Plantings Report and the Quarterly Grain Stocks Report. We have seen numerous days in 2021 when soybeans had a daily range of at least 30 cents. That wide range could become even more commonplace the balance of March.
Shortly after the report was released, corn was down 6 cents, soybeans down 8 cents, and wheat up 3 cents. Just before the report release, corn was down 2 cents, soybeans were up 2 cents, and wheat up 8 cents.
Demand rationing for soybeans and corn has been “THE” function for the market to accomplish since last fall. While you see numerous opinions on price activity yet to come in the next 90 days, often you are seeing “demand rationing,” is yet to be accomplished. Prior to today’s report, U.S. soybean export sales were 98% of expected exports. The 5-year sales average at this date is 84%. U.S. corn export sales are 89% of expected exports, while the 5-year sales average is 67%. Soybean sales in the past three months have been as much as 20 points above the 5-year sales average.
It’s a well-known fact Brazil’s soybean crop is behind normal with planting delays taking place in many regions. In spite of those delays, the boat lineup to load soybeans continues to grow. Currently, at least 19 million tons (698 million bushels) of soybeans are waiting to be loaded in boats on station or near loading locations. If you assume the average vessel travels with 2 million bushels of soybeans, there are 350 boats waiting to load soybeans. If you are like me, that huge number was “mindboggling.” Sit down for this one. Those boats will be loaded in just 45 days.
Argentina is in the midst of a 50 year drought. Rosario, an inland port on the Parana River cannot load the boat to full capacity when water levels are so low. They are forced to partial fill the boat and then send it to ports closer to the Atlantic Ocean to load the remaining bushels.
Cinch that seatbelt up even tighter for price volatility to take place this month. Or better yet, get a new seatbelt.
It is hard to believe, but with good weather conditions planters will be rolling in 30 days.