This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
After all the hype and buildup, the USDA quarterly stocks report and prospective planting report were both very boring. But you will not hear one complaint from me. The corn bulls have been worried about this report for quite some time now. On the stocks side of the report, corn stocks came out at 8.151 billion bushels which is dead on the money to the average trade estimate. That is 201 million bushels less than last year. Soybeans stocks came out at 1.910 billion bushels just 9 million bushels above the trade estimate and 65 million bushels above last year. Wheat stocks came out at 1.237 billion bushels which was only 17 million bushels above the average estimate and 148 million bushels above last year. There was some concern in some circles that feed demand for corn could be lagging estimates and some had worried about a bearish surprise on corn stocks. That was not the case and the report showed very strong demand for US commodities.
On the Prospective Plantings Report, USDA pegged corn intended acres at 95.326 million. That was almost a million acres above the average trade estimate and 1.3 million acres above the number USDA used in the Outlook conference (and almost 5 million more acres than last year).. This sounds like a big surprise the market obviously had it priced in already because new crop closed the day down less than 1 cent. If you looked at the report before you checked the market after the report was released, you may have expected a negative reaction but the selloff over the last few weeks in corn has taken enough premium out of the market already.
For soybeans, USDA pegged intended acres at 83.495 million. That is almost 200 thousand below the average trade estimate and almost half a million less than USDA used at the outlook conference (and 3.5 million less than last year). The market dropped almost double digits as many had expected a lower number but the soybean market had also gotten a few up days in a row.
Wheat acres came down almost a million acres from the January estimates which is not surprising given the struggle of the market to gather any price strength. Cotton acres were also below expectations, estimated at 9.867 million compared to average market estimate of 10.189 and 10 million that USDA used at the outlook conference. The cotton market could not manage to rally on the news because it needs demand to get excited about.
Now that this is behind us, the market can start trading weather more earnestly and go back to watching outside market/geopolitical developments. April is the most crucial weather month for Brazilian second crop corn and the North American growing season will start soon. The best part about this report being out is that the corn number was not so big that weather would not matter. Any weather threat to the US crop will have to be quickly priced in and we are going into a growing season with elevated weather threats.