USDA report neutral

By Doug Tenney, Leist Mercantile

After the noon report was released, corn was up 8 cents, soybeans up 19 cents, and wheat up 2 cents. Just before the report, corn was up 9 cents, soybeans up 21 cents, and wheat up 3 cents.

The February WASDE Report is normally not a game changer. Today USDA will have supply and demand numbers along with world production estimates. Traders are expecting small changes for US ending stocks. In addition, traders are most anxious to see the corn and soybean production numbers for South America.

US corn ending stocks for 2021-2022 were 1.540 billion bushels, last month, 1.540 billion bushels. US soybean ending stocks were 325 million bushels, last month, 350 million bushels. US wheat ending stocks were 648 million bushels, last month, 628 million bushels.

Trader estimates have US corn ending stocks 1.512 billion bushels, soybean ending stocks 310 million bushels, and wheat ending stocks 629 million bushels.

USDA today projected China would be importing 97 million tons of world soybeans. Last month it was 100 million tons.

Brazil soybean production was 134 million tons, last month 139 million tons. Brazil corn production was 114 million tons, last month 115 million tons. Argentina soybean production was   45 million tons, last month 46.5 million tons. Argentina corn production was 54 million tons, last month 54 million tons.

Traders could easily be disappointed with South America soybean and corn production numbers.

Here’s why. Last month USDA had the Brazil soybean production at 139 million tons and corn production at 115 million tons. Some private estimates have the Brazil soybean production below 130 million tons. Do not expect the Brazil soybean production number to drop below 130 million tons. USDA is not going to drop production that much in one report.

Producers need to be keeping an eye on international news. Will Russia invade Ukraine? Russia has amassed troops of at least 100,000 along the Ukraine border. Russia President Putin is an ex KGB officer, ex may be a misnomer. Keep in mind his goal is to get the individual states which took place with the Soviet Union breakup in the 1980’s, back together. Or to put it in classic terms – just as the Blues Brothers “wanted to get the band back together,” that would seem to be Putin’s goal. Also, there continues to be lots of tension between China and Taiwan.  Don’t be surprised if military actions take place in the months which follow the Olympics. Russia and China are the two aggressors.

Keep in mind both soybeans and corn are in demand driven markets, not supply driven. In demand driven markets, prices have to get high enough, long enough to ration demand.

Expect fireworks into the spring.

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