Drumroll Please As We Countdown
Mar 31, 2016
Good Morning! Paul Georgy with the early morning commentary for March 31, 2016.
Grain markets are quiet with minimal change ahead of the USDA reports. The US Dollar continues to decline as equity indices remain firm.
The report everyone has been waiting for will be released at 11:00 am CT. Trade average estimate for Corn planted acreage is 89.972 million acres, soybeans 83.057 million acres and wheat 51.702 million acres.
Below is how much one million acres planted could impact ending stocks, according to Rich Nelson, Allendale’s Chief Strategist:
Corn: Every one million acre change in corn plantings does not have a major impact on ending stocks. One million planted acres of corn x 91.28% harvested x USDA's 168 yield = 153 million bushels of production impact. After a 50% offset from demand the change in ending stocks is only 76 million bushels.
Soybeans: Every one million planted acres in soybeans only has a 23 million bushels change in ending stocks. One million x 98.88% harvested x USDA's 46.7 yield = 46 million bushels of production. Assuming a 50% offset from demand that only means a 23 million change to stocks.
Wheat: Every 1 million acres change in wheat plantings only means a 19 million bushel change to ending stocks. 1 million acres x 84.12% harvested x USDA's 45.9 yield makes 39 million bushels of change to production. A 50% demand offset means a 19 million change to ending stocks.
Quarterly stocks trade average estimate: corn 7.801 billion bushel, soybeans 1.556 billion bushel and wheat 1.356 billion bushel.
Historical data shows 9 out of the last 15 years corn rallies the day of these reports and soybeans go down 9 out of the last 15 years on the day of these reports.
Ethanol production remains strong at 992,000 barrels per day which is 4.2% over last year. Productions year to date pace is 2.4% over last year. If you plug in an increase in the corn for ethanol conversion this year, 1.9% year/year, then USDA is right on target. On the other hand, ethanol stocks grew by 503,000 barrels in the latest week to now 23.022 million barrels. That is under the record of 23.307 posted three weeks ago but is 12% over last year.
To ease near record prices for corn, Brazil's government announced it would sell public stocks and proposed dropping import taxes for grain, while the livestock industry said it booked imports of 500,000 tonnes through May.
USDA’s weekly export sales report will be released at 7:30 am. Trade estimates are: wheat 150,000 to 350,000 tonnes for old crop and 75,000 to 300,000 tonnes for new crop. Corn 800,000 to 1,000,000 tonnes and soybeans 300,000 to 600,000 tonnes, soymeal 100,000 to 300,000 tonnes and soyoil 8,000 to 28,000 tonnes.
Livestock futures fell under liquidation selling by funds and technical sell stops on Wednesday. Packers have not shown up at feedlots yet this week. A few cattle were reported selling in IA at 136 on Tuesday. Some cattle were reported trading at 214 to 216 dressed in NE on Wednesday. Product values collapsed on Wednesday and some traders are calling a near term high as seasonal so suggest. Follow through selling today could be the deciding factor future trend.
Dressed beef values were lower with choice down 3.19 and select down 4.16. The CME Feeder Index is 158.29. Pork cutout values are up 1.27.
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