It was another mixed trade in the grain markets this week. The corn and wheat markets set their highs for the week on Monday, while the soybean market forged its lows for the week during Monday’s trade.
The soybean market continues to be supported by tight U.S. old crop supplies and shipping problems in South America. These delays in shipments have once again shifted near-term demand back to the U.S. This is business that cannot continue alongside the current U.S. domestic crush pace. It is expected that old-crop soybean values may have to rise significantly in the near-term in order to ratchet back this recent demand.
The longer the market waits to ration the current supply, the more acute the rally may have to be down the road. There are some potential surprises that could derail this rally. One of which is the nearly 85 million bushels of unshipped soybean sales to China that are susceptible to cancellation.
Otherwise, we would look for an old-crop soybean rally toward $15.50 that may drag new crop values near $13.15 over the next month. Corn values struggled at mid-week as concerns grew that the current slow pace to exports could result in a 50-75 million bushel cut in projected exports in Friday’s USDA report.
In addition, fears were that any increase in feed usage may have been delayed until after the March 28 stocks update. This would have resulted in a larger than expected increase in projected corn carryover supplies. That is not what occurred on Friday. USDA was aggressive in cutting its export figure, but was more aggressive in raising its feed usage estimate. In fact, it was necessary to increase imports by 25 million bushels in order to keep from cutting the corn carryover estimate.
This was a shot in the arm for the corn market on Friday and sets the stage for further price strength into the middle of the month. We would look for May corn to trade toward $7.30 and perhaps dragging new-crop corn toward $5.75.
Coverage, Analysis of the March 8 USDA Reports
See all of the data, coverage and analysis of the WASDE and Crop Production reports.
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