By Doug Tenney, Leist Mercantile
After the noon report was released, corn was down 12 cents, soybeans up 9 cents, and wheat down 70 cents. Just before the report, corn was down 11 cents, soybeans up 14 cents, and wheat down 66 cents.
In spite of the potential of numerous changes in production and export capability of grains around the world, it is feasible USDA would punt, and make very few changes with this report. The “punt” aspect would follow the USDA trend in recent months.
Later this month, two USDA reports will be on Thursday, March 31 – Prospective Plantings and Quarterly Grain Stocks.
Traders are expecting small changes for U.S. ending stocks. In addition, traders are most anxious to see the corn and soybean production numbers for South America. On Thursday CONAB, the USDA equivalent in Brazil, will publish soybean and corn production estimates.
U.S. corn ending stocks for 2021-2022 were 1.440 billion bushels, last month, 1.540 billion bushels. U.S. soybean ending stocks were 285 million bushels, last month, 325 million bushels. US wheat ending stocks were 653 million bushels, last month, 648 million bushels.
Trader estimates have U.S. corn ending stocks 1.479 billion bushels, soybean ending stocks 278 million bushels, and wheat ending stocks 628 million bushels.
USDA today projected China would be importing 94 million tons of world soybeans. Last month it was 97 million tons.
Brazil soybean production was 127 million tons, last month 134 million tons. Brazil corn production was 114 million tons, last month 114 million tons. Argentina soybean production was 43.5 million tons, last month 45 million tons. Argentina corn production was 53 million tons, last month 54 million tons.
I concluded this report last month with the following simple sentence, “Expect fireworks into the spring.” That was quite the understatement to summarize grain price activity this past month!
Those fireworks were brightly displayed with several examples, including: wheat daily limits were reached on seven consecutive days with the Monday, March 7 close. Wheat daily limits are normally 50 cents, they were expanded to 75 cents, back to 50 cents, back to 75 cents, then 85 cents, and finally when the limit was expanded to $1.30 on Monday. During the beginning of the Monday evening night session which started at 8 pm, May CBOT wheat had a range of $1.05 in the first 10 minutes.
Another fireworks example: last week on Wednesday and Thursday, the vast majority of Ohio’s grain facilities abruptly changed to the July CBOT and away from the May CBOT for March, April, and May corn and soybean bids. Also, the nearby and new crop wheat bids are now based on the September CBOT month. Inverses between the May and July quickly became even steeper or wider with the beginning of the Russia invasion into Ukraine. End users became unwilling to buy grain at the flat prices which resulted from using the May CBOT month. Those changes resulted in dimes of basis declines for old corn, soybeans, and wheat.
The international news is not going away. For the near term, both Black Sea corn and wheat exports could be reduced 15 million tons. Ukraine’s ocean export facilities have mines to be cleared before shipping activity resumes. Ukraine on Monday indicated they wanted to ship grain by rail into Europe to load from those ocean export facilities. In addition, the South America soybean and corn production declines are not going away.
The world continues to be appalled at the Russia invasion into Ukraine, it is wrong and immoral on so many fronts. But, keep this reality in perspective, Russia President Putin does not care and he has nukes. He is still steamed at the breakup of the Soviet Union decades ago. His objective is simple — he wants to get all of those “lost” regions which now experience their own government, back into the umbrella of Russia. Putin wants to, “get the band back together.”
Corn and soybeans have been in demand driven markets since last fall. Two events, the South America drought and the Russia invasion into the Ukraine have pushed that reality into the background. It is still there.
Those with crop insurance have until March 15 to make coverage changes for 2022 corn and soybeans. In addition, those with cover crops will need to report those acres to FSA on that same March 15 deadline to receive the $5 credit per acre on the crop insurance bill for corn and soybeans. That reporting date is vastly different compared to last year which was June 15.
Price volatility remains steep into the U.S. spring planting season. CBOT margin requirements for grains have increased at least 4 times in the past two weeks.