Quarterly Grain Stocks Bearish

Published on: 15:18PM Apr 01, 2019

Export Sales Announcement

  • Private exporters reported to the U.S. Department of Agriculture export sales of 828,000 metric tons of soybeans for delivery to China during the 2018/2019 marketing year.

USDA March 1 Quarterly Grains Stocks Bearish; Should Add To Carryouts

  • The USDA’s March 1 grain stocks was a bearish report for the three major exchange-traded commodities —corn, soybeans and wheat — as all three commodities showed larger than analyst estimated inventories.
  • Corn Stocks:  Analysts estimated March 1 corn stocks were 8.33 BBU and the actual number reported by USDA-NASS was 8.6 BBU or a 270 MBU difference.  This was a bearish surprise.
  • Wheat Stocks: Analysts estimated March 1 all-wheat stocks at 1.55 BBU and the actual number reported by USDA-NASS was 1.59 BBU, a 40,000 bushel difference. The figure was the second largest reported March stocks number since 2000.  Estimated HRS stocks were the most bearish.
  • Soy Stocks:  Both the analyst estimate of 2.68 BBU and the actual USDA reported 2.72 BBU are bearish.  The 2.72 BBU March 1 stocks figure is the largest March inventory on record and is a victim of U.S./Chinese trade war.  
  • What It Means For The U.S. Farmer: The USDA’s March 1 stocks reports were bearish all primary U.S. commodities as disappearance is not occurring at a rate reflected in the March WASDE.  Given the challenging year for U.S. corn, soybean and wheat export programs expect the USDA to lower exports along with the feed & residual categories in the April WASDE and raise ending stocks.  Now more than ever, the U.S. farmer needs a trade deal with the Chinese to help with disappearance.

USDA’s Prospective Plantings: Bearish Corn, Supportive Soy and Cotton      

  • The March report is the NASS’s first survey-based estimate for the upcoming crop year and is followed by a similar survey-based report at the end of June. The rise in corn and the decline in soybean acres were expected, but the decline in cotton and spring wheat provided an unexpected bullish surprise.
  • USDA estimated planted corn acres are 92.8 MA for the 2019/20 crop year. The analysts were estimating 91.3 MA planted acres for a difference of 3.7 MA YoY. The corn acres number is bearish, as the actual USDA number was 1.5 MA higher than the analyst estimate of 91.3 MA.  
  • Planted soy acres are estimated at 84.6 MA  for the 2019/20 crop year. The analysts were estimating 86.16 MA planted acres for a difference of -4.59 MA YoY or -5.1 %. The soy acres number is bullish, as the actual reported number is -1.5 MA lower than analysts were looking for.
  • The USDA’s estimate of “other spring wheat” planted acres, including the hard and soft varieties, at 12.83 MA was a bullish surprise, as the market was looking for an increase in wheat acres to 13.4 MA. The decline of 400,000, -3% YoY, in the key growing states is led by the sharp reduction in Montana acres, which lost 300,000 acres from 2018.
  • What It Means For The U.S. Farmer: The decline in cotton, spring wheat and soybean acres could help provide some support to cash and futures prices as production can decline as acres have fallen.  The corn acres number combined with a growing 2019/20 carry-in does not present much of a bullish case. Soy acres can be a positive development for prices but the estimated beginning stocks number will be a challenge to work through.                                           


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