USDA Prospective Plantings Report Tomorrow
Mar 30, 2016
Grains were lower overnight leading up to tomorrow’s USDA report as gains over the past two trade sessions were met with some selling pressure. In outside markets, crude oil reversed course posting a nearly $1 a barrel gain and stock futures are higher.
Grain traders worried on Tuesday about the risk for reduced demand from China after the government said it would scrap its corn stockpiling program at a time when global markets are awash with excess supplies. Traders said importers in China would likely reduce purchases of farm products used to feed livestock, including sorghum and the ethanol byproduct distiller’s dried grains (DDGs). They said the policy shift is expected to bring domestic corn prices in line with cheaper foreign supplies. Last year, China imported about 40 million tonnes of substitutes for corn, including sorghum, DDGs and barley, from the United States and other countries, said Fred Gale, a senior economist for the U.S. Department of Agriculture. At times, corn prices in China were double those of the import.
Thursday, USDA is expected to report higher corn acres for 2016 with expectations running at 90 million acres planted versus 88 million in 2015. For soybeans average estimates look for a 83.1 million acre planting, which is a modest 400,000 acre increase over last year. However, the variance in the estimates is quite large, ranging from 81.6 to 84.2. USDA will also release their quarterly stocks report next week.
In crude oil, prices found support late yesterday as API crude stocks estimates were only modestly higher than expected at 2.6 million barrels higher versus an expectation of a 2.0 million barrel build on the week. This was off sharply from last week’s build of 8.8 million barrels. IA will release official government data later this morning at 9:30 CDT and traders look for a 3.3 million barrel increase in stocks compared to last week’s 9.3 million barrel increase.
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