USDA left U.S. ending stocks unchanged for corn at 1.342 billion bushels and soybeans at 210 million bushels, which was a head scratcher after the tighter quarterly stocks we saw at the end of March. The agency actually raised wheat ending stocks by 30 million bushels but by lowering feed use and leaving exports unchanged.
Market analysts say those numbers are all bearish compared to expectations and they think USDA is just punting until the May WASDE Report which gives us our first look at the new crop balance sheet. Brian Splitt, AgMarket.Net says, “Maybe the USDA is waiting until next month when we’re going to starting integrating the new crop numbers into this and they may be a little bit more inclined to start shuffling the old crop as we get a little bit better view ahead of what the new crop balance sheet may look like and maybe that’s when they reduce old crop stocks, knowing ahead of time that these new crop stocks are going to look bearish.”
However, he agrees that cash corn and soybean prices in the country would signal that ending stocks are much tighter than the numbers printed Tuesday by USDA. So, Splitt says cash basis levels and the spreads may tell the real story. “It’s tight. And so, we would expect that as we go into delivery for the May contracts, especially if the producers in the field and they’re aggressively planting we would expect the old crop basis and the spreads that continue to be strong.”
If fact he thinks those May, July spreads could see some new highs again as May goes into delivery trying to incentivize physical movement of grain.
For South America, USDA was fairly aggressive lowering Argentina production by 6 million metric tons on soybeans and 3 mmt on corn and Splitt believes we’ll see be some additional adjustments in the future. “USDA may still be a couple million tons too high on the Argentina soybean crop and maybe that comes to fruition in the next month or two. The brazil bean crop got a little bit bigger, big crop gets bigger, and I wouldn’t be surprised as we move ahead to see safrihna soybean or the suffering of corn crop start to get a little bit bigger as well.”
He says the safrinha corn crop is planted, and weather has been improving, which could mean a record corn crop in Brazil. And soybean harvest results there have also been confirming a record bean crop.
