By Doug Tenney, Leist Mercantile
USDA numbers on March 31 include U.S, Prospective acres and U.S. quarterly grain stocks as of March 1. U.S. acres: corn 89.49 million acres, soybean 90.96 million acres, and all wheat 47.35 million acres. U.S. grain stocks: corn 7.85 billion bushels, soybean stocks 1.931 billion bushels, and wheat stocks 1.02 billion bushels.
Finally it is a USDA report day which has been on everyone’s radar for weeks. This report day has a long history of extreme volatility. The roller coaster ride for grain prices in the first 30 minutes following the report release could easily be violent. Many refer to this USDA report day as ranking in the top three report days of the entire year. End users are behind in getting forward coverage in place. If corn and soybean numbers are bearish, end user pricing could cushion the negative news.
Just after the noon report release, corn was up 22 cents, soybeans down 12 cents, and wheat up 15 cents. Prior to the reports, corn was up 2 cents, soybeans up 7 cents, and wheat up 8 cents.
The grain markets have been extremely volatile the past month. The Russia/Ukraine conflict has been a huge part of that volatility. CBOT volume has been reduced in recent weeks. In addition, the funds are approaching record levels of contracts they hold as a percentage of total open interest. Also, grains have been trading in defined ranges in recent weeks.
The algorithm machine traders have been heavily trading the headlines, selling dips and buying rallies. Then just days later they are doing the exact opposite
Wheat prices especially, with corn to a lesser magnitude, have moved in much bigger price changes compared to the past, think multiple dimes. For example, an order of 10,000 plus contracts in recent weeks has moved the market 10 to 20 cents. This compares to past years when a similarly sized order resulted in a price movement of 3 cents.
Trader average U.S. acres estimates ahead of the report were: corn 92.001 million acres, soybeans 88.727 million acres; and all wheat 47.771 million acres. Last year, U.S. acres were: corn 93.357 million acres, soybeans 87.195 million acres, with all wheat at 46.703 million acres.
Average trade estimates for March 1 grain stocks: corn 7.877 billion bushels, soybeans 1.902 billion bushels, and wheat 1.045 billion bushels.
Today is month end as well as the end of the quarter. The reports today did not include supply and demand tables. The next WASDE report will be on April 8. Some are already projecting that the April report will see few updates, if any, for Ukraine corn and wheat production along with Ukraine exports. Instead, they are already thinking USDA will wait until the May 12 WASDE Report to update the Ukraine numbers. That same report day, USDA will detail U.S. new crop corn, soybean, and wheat supply and demand tables, those tables are the first published for new crop grains.
Grains should start trading weather in a much bigger fashion in April. Numerous parts of the Midwest are too wet. Some are already suggesting April could be a slow planting month with huge progress taking place in May. In addition, the threat of a ridge developing in the western Corn Belt, and potentially moving to the east is a huge unknown into the summer months. The current dry U.S. Plains lends potential to that ridge.
Expect huge price ranges for the grains to take place at least twice a week or more into June.