Brooks Schaffer Market Report for Friday February 16

This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.

The USDA outlook conference is underway yesterday and today. USDA will give us the first glimpse of the new crop production and balance sheet estimates. This data is compiled by the USDA economists and not from survey data of actual farmers. We will get the survey data on the Prospective Plantings report that comes out March 31st. Thursday morning they posted the supply/demand balance sheets. 

On corn, USDA is using 91.0 million acres which is down 3.6 million acres from last year. They pegged trendline yield at 181.0 bushels per acre compared to last year’s final yield of 177.3. This puts ending stocks at 2.532 billion bushels compared to the crop we have in the bin right now at 2.172 billion. My first reaction to seeing the numbers was that it was not nearly as bad as I was worried it was going to be. We need this or less acres. Last year we added 2.6 million more acres of corn than were intended. If we had not planted the extra acres, we would have had 461 million less bushels on the balance sheet and would not have added the cushion to the corn balance sheet. We need to gain demand and trim acres to get rid of the excess supply of corn. The low price is helping gain demand and hopefully it will help trim the acres as well. 

For soybeans, USDA used 87.5 million acres which is up 3.9 million from last year. They plugged in 52.0 bushels per acre for yield compared to 50.6 last year. That puts ending stocks at 435 million bushels compared to 315 million for the crop that is currently in the bin. I think there is still some work on the old crop balance sheet as USDA trimmed exports but did not adjust domestic demand so I think the old crop carryout will still come down. Beans need to find support to keep the acres corn is trying to lose. 

On wheat, USDA used 47 million acres which is down 2.6 million from last year. They filled in yield at 49.5 bushels per acre compared to 48.6 last year. Despite lower acres and only a slight increase in yield, they project a pretty significant stocks increase to 769 million bushels compared to 658 million bushels for this year. 

The cotton market has been the lone bright spot for the commodities we follow. We have seen enough exports over the last few weeks to spark some significant buying. Many Southeastern producers were talking cotton acres down only a month or two ago but now need to reevaluate that after the drop of the other commodities. USDA estimates that world production will slightly exceed consumption for the upcoming crop year though. The US is going to account for almost the whole increase in production, assuming we do not have a third disaster in Texas in a row.