This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
We got USDA’s Ag Outlook Forum numbers Thursday morning. I would call them mildly bearish for corn and wheat and mildly bullish for beans. They are not dramatically bigger or smaller than expected. However, these are just baseline projections made by economists, not actual farmer surveys like we will get on the March 31st report. For corn, USDA used 94 million acres compared to average trade guess of 93.6 and 90.6 last year. On beans, USDA pegged it at 84 million acres compared to 84.4 average trade guess and 87.1 million last year. For all wheat acres, USDA used 47 compared to 46.7 average trade guess and 46.1 last year.
One other number that jumped off the page at me was USDA’s trend yield of 181 bushels per acre (last year’s yield was 179.3). There is a lot of debate about that as some analysts think that is too low and some think it is too high. It is the number USDA will fill into their balance sheets until at least the May supply and demand report. Using those acres and similar assumptions of demand, the new crop carryout is only pegged at 1.965 billion bushels. Starting off the first balance sheets below 2 billion bushel carryout is not bearish. That is using similar ethanol and export estimates to this year which will hopefully need to be revised higher if we continue at the current pace of demand.
Ethanol grind this week remains well above the pace needed to reach USDA’s target, but ethanol stocks were also sharply higher this week. Ethanol stocks are approaching record highs. Seasonally we expect building stocks, we hope they will be quickly pulled down as the spring driving season begins. Some guidance from the new administration would also be helpful to the industry. Exports fell this week to a 7 week low on corn (and a 5 week low on wheat) which we hope is a one off week and not a trend. Market will be watching even closer for next week’s export report.
This has been a rough week for the grain and oilseed markets. Weather is one factor. There has been good general rains in Argentina and dry weather allowing Brazilian bean harvest and corn planting to catch up. Outside markets have also been a big factor with renewed talk of tariffs. After the last tariff threat on Canada and Mexico, Trump said he was going to put a 30 day pause on them. That 30 days is coming up soon on March 5th and Trump recently said the tariffs are on schedule to go into effect. We are having a hard time reading through the noise on these headlines and the market does not like the uncertainty. Much needed moisture in the US Great Plains is weighing hard on wheat as well and the weakness in wheat has spilled over into corn. It has been impressive how well beans have held on this week with big Brazilian crops and weakness in the other grains.