Neutral numbers for corn, bearish for soybeans and wheat

By Bennett Musselman, Leist Mercantile

Trade expectations: U.S. soybean exports reduced, increased ethanol demand and Brazil soybean and corn production to be reduced.    

Following the noon USDA report release, corn was down 2 cents, soybeans down 12 cents, and wheat down 9 cents. Moments before the report was released, corn was down 1 ½ cents, soybeans down 8 cents, and wheat down 6 cents. 

U.S. 2023-2024 ending stocks: corn 2.122 billion bushels, last month 2.172 billion bushels; soybeans 340 million bushels, last month 315 million bushels; and wheat 698 million bushels, last month 673 million bushels. 

Trader estimates for 2023-2024 US ending stocks: corn 2.102 billion bushels; soybeans 317 million bushels; and wheat 690 million bushels. 

Surprisingly there were no changes Brazilian soybean production. The trade was anticipating a slight reduction in the Brazilian soybean crop. USDA this month estimates Brazil soybean production at 155 million tons, last month was 155 million tons. Argentina soybean production was 50 million tons, last month was 50 million tons.

Brazil corn production was estimated at 124 million tons, last month was 124 million tons. Argentina corn production was estimated at 55 million tons, last month was 56 million tons.

U.S. grain export sales continue to be disappointing for soybeans. U.S. soybean exports to date are 1.501 billion bushels, down 19% from last year. There have been cancellations of 2 million bushels to China/Unknown this past week. Meanwhile, U.S. corn exports have been a bright spot for grain fundamentals. Corn commitments are at 1.74 billion bushels and up 17% from last year and 25% over the USDA forecast.

The EU has been recent buyers of soybeans. The spread between Brazilian and the U.S. gulf is 27-35 cents for late summer which gives U.S. soybeans the advantage. It is speculated that companies in the EU are crushing soybeans and sending the soy oil back to the U.S. to take advantage of the U.S. carbon credits and blender’s credits. 

While at the Commodity Classic on March 1, Secretary of Agriculture Tom Vilsack stated that the Biden administration is expected to release a climate model for the Sustainable Aviation Fuel (SAF) subsidy program within weeks, not months. It is anticipated that ethanol will not automatically qualify for the SAF subsidy. To be eligible, corn used for ethanol production would need to be grown using one of three sustainable agriculture farming methods. These methods would include efficient tillage, efficient fertilizer usage, and the incorporation of cover crops. 

Grains continue to suffer from a lack of fresh fundamental news. The markets have been uneventful leading up the USDA report. After the report it is expected that the traders will shift their focus to Central U.S. weather and planting progress.

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