Focus Shifts to Weather as USDA Crop Progress Reports Begin

Corn: Even as the USDA reminded the market of ample corn stocks, prices have been moving higher due to an acreage number that leaned friendly for the market. Acreage was reported four million below prior season at 89.996 million, approximately one million acres below expectations. It is interesting to note that the ‘Principal Crops Area Planted’ only amounted to 316.9 million acres, down 2.3 million acres from prior year. The trade assumes any added acres should go to soybeans.

March 1st stocks of 8.616 billion bushels was 82 million bushels above the average trade estimate and up 10% from prior year; on-farm stocks saw the larger increase, up 13% YoY to 4.91 billion bushels. There’s plenty of old-crop available in the pipeline and if acreage moves higher from here, the market should begin to trend lower yet again (or vice versa). In the meantime, a Spring rally is not anything out of ordinary.

Corn may be used as a bargaining chip in U.S.-Mexico trade talks that are expected to take place this month. ‘From the hundreds of millions of tortillas consumed every year to the countless tons of corn-enriched feed that fattens livestock and poultry, corn is perhaps Mexico’s most important agricultural commodity, one at the center of its life and culture.’ In 2016, the U.S. exported nearly $18 billion of agricultural products to Mexico, the third-largest market for these exports, according to the U.S. Department of Agriculture.

Soybeans: Soybeans extended the move lower into this week following a bearish confirmation from the USDA. The 2017 soybean crop increased approximately 1.5 million acres from the outlook forum estimate of 88 million to 89.5 million acres, up 6% from prior year as nearly every state reflected an increase, though the largest shift was noticed in the Northern Plains. Bean stocks at 1.735 billion bushels were well over acreage trade estimates of 1.676 bbu and the second largest recorded over the past 10 years.

Furthermore, the world’s total grain (wheat and coarse grain) supply in 2016-2017 and 2017-2018 will cross 2.5 billion MT amid record harvest and high carryover stocks, according to a report released by the International Grain Council. Despite a 3% drop in 2017-2018 production and strong projected demand resulting in a lower estimated carryover, stocks are expected to reach the second highest level of more than 2.5 billion MT for the second consecutive year.

Argentina’s biodiesel industry leaders suggest their biodiesel exports could be devastated if the U.S. government imposed anti-dumping duties on the country based on a complaint by the U.S. National Biodiesel Board. “If a sanction is applied against Argentina in the US market, our exports will no longer be viable. At this point, there is no alternative market,” Claudio Molina, executive director of the Argentine Biofuels Association said on Friday in an interview.

On the radar from Michael Cordonnier: Specialists from Agroconsult have indicated that they will probably increase their 2016/17 Brazilian soybean estimate in their next monthly report. Their last estimate of the 2016/17 Brazilian soybean crop was 107.8 million tons, but they are expected to increase that estimate in their next monthly report to perhaps 110-111 million tons.

Questions? Call HighGround Trading 312-604-3080

WRITTEN BY Alyssa Badger

Alyssa started her career in 2008 at the Board of Trade managing a firm that had a primary focus in grains. The nucleus of her position centered around order entry and research development; from there, Alyssa's enthusiasm for commodities continued to grow and expand. This enthusiasm lead her to move to West Texas and assist in hedging for the largest originator of U.S. cotton to textile mills worldwide. Alyssa has now settled back in Chicago as a Trading Consultant for Highground Trading, Inc. Contact Alyssa