AgriVisor Market Recap

Tuesday, March 30, 2021
Much of today’s session was spent getting final positions in place ahead of tomorrow’s USDA data release. Elevated positioning ahead of month and quarter end was also noted in today’s session. Aside from this there was little fresh news for trade to work with today other than weather, which is becoming less threatening each day. Another sharp up move in the US dollar and building inflation worries were also bearish for commodities. This put more of an emphasis on technicals, and as these broke down during the session, futures dropped as well. We did see a flash sale on corn this morning as an unknown booked 100,800 metric tons for 2020/21 delivery, but that failed to offer much support.  

The greatest losses today took place in the soy complex with oil posting a limit loss. A primary reason for this was a correction to crush spreads with meal and declining margins. An exodus of weak longs ahead of tomorrow’s USDA reports added to the negativity in the soy complex. Thoughts that tomorrow’s numbers may not be as friendly as earlier suspected added to the negativity in the complex. 

The most interest in tomorrow’s USDA reports is focused on prospective acreage. The estimate range for corn acres is from 92 to 94 million. This compares to last year’s corn plantings of 90.8 million acres. Soybean intentions will receive the most attention where the range of estimates is from 88 million to 92 million. This compares to last year’s acres of just 83.1 million. The record for soybean plantings in the United States was in the 2017/18 marketing year at 90.2 million. Any total under that will be concerning to the market. Wheat acres are projected at 44.9 million compared to 44.35 million last year. 

The average estimates on March 1st stocks are mixed. March 1st corn stocks are projected at 7.67 billion bu (bbu), just under last year’s 7.95 bbu inventory. The average soybean inventory figure is for 1.54 bbu, well under last year’s 2.26 bbu. This is also the smallest March 1st inventory since 2016. Wheat stocks are projected at 1.28 bbu, down from last year’s 1.41 bbu. This would be the smallest March wheat inventory since 2016. 

We are seeing some doubt cast over the soybean stocks estimate, with more thoughts it could be higher than estimates indicate. This comes from the large volume of soybeans that were being exported prior to the December stocks report and how the volume of soybeans in transit may have been miscalculated. There are thoughts this could add from 50 to 90 mbu of soybeans to the current inventory. Even at the high end this would still leave the US with a minimal 210 mbu carryout using the current supply and demand figures.  

Another number that will be closely watched in grain stocks is feed demand. Feed usage on corn from September to November was record high in the United States. Since then we have seen a shift to alternative feed grains and a rebuild in distiller grain inventories which likely reduced corn usage. We are also seeing lower animal inventories in the United States, mainly hog numbers. It is not out of the question that feed demand on corn could slip as we move through the remainder of the marketing year. 

Once tomorrow’s numbers are released, we will quickly see attention shift back to the next WASDE report. The most interest is going to be on demand where increases are expected. The most is to corn where some analysts believe usage is currently underestimated by 400 million bu (mbu). On soybeans there are thoughts demand is currently underestimated by 100 mbu. If this is correct, it would nearly deplete US soybean reserves. Wheat demand is also forecast to increase by 65 mbu. While these changes may be warranted, they will likely come later in the marketing year. 

Forecasters are now claiming the La Nina weather event has greatly diminished and indicators are quickly turning neutral. Thoughts are the event will be fully gone within a few months which would benefit both double cropped acres in South America and most of the entire US growing season. Some models indicate a return to a mild La Nina by winter, but nothing that would impact crop production. Outlooks also fail to indicate an El Nino at this time. 

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named.  This is not independent research and is provided as a service.  As such, this is considered a solicitation.