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It's March: Prevent-plant acres eyed

Ray Grabanski Updated: 03/12/2014 @ 3:14pm President, Progressive Ag www.progressiveag.com

New-crop soybeans pushed to new recent highs this week, but old-crop soybeans continued to suffer from selling after sharp losses Monday. Could China finally be shifting purchases to new-crop from old-crop months?

There was a crack in the bull market Monday. The USDA March report was not really a bearish report, but the market sure reacted that way. In fact, the USDA report came out with mostly friendly news (-25 mb corn stocks, -5 mb soybean stocks, -1.5 mmt Brazil soybean production).  World ending stocks of soybeans were cut to 70.64 mmt from 73.01 mmt last month (also bullish), but corn stocks were hiked to 158.47 from 157.3 last month, and wheat hiked to 183.81 mmt from 183.73 mmt last month.  

The rise in corn world ending stocks surprised the trade, and down we went! Soybeans lost nearly 40 cents on old-crop months, and corn/wheat was down 10 to 13 cents. That terrible performance made market bulls wary, but the follow-through wasn't there as today the market gained back all losses in wheat and new-crop soybeans (plus some), and recovered half the losses in corn. It was only the old-crop soybeans that continued to suffer.  

Probably, the biggest numbers anticipated by the trade will come at the end of this month, when stocks and intended acreage in the U.S. will come out. USDA will use these numbers for acreage until the July USDA report, with planted acreage not actually reported until the end of June. There are lots of numbers bantered around for these reports, but the main attention will be on the share of acreage between corn, soybeans, and HRS wheat. It's likely that we will see from 3 to 4 million acres more soybeans in 2014 (or more), and most of that acreage will come from corn. But what will happen to the 8.8 million acres of prevent-planted ground might yet be up in the air, and that might be the critical question yet to be answered by the trade. 

Weather continues to improve for the crops, with drier weather throughout Brazil forecast the next week, which should allow more harvesting of grains there and planting of second-crop corn. U.S. weather is also offering a bit of a warmup the next week in the western Corn Belt, with snow melting rather quickly now and opening up the possibility that this spring won't be so late - at least in the western Corn Belt. The 8- to 14-day forecast also improves with warmer temps and less precip. This is starting to straighten out from the cold/wet forecast of the past few months and our bitter winter weather, and that is encouraging as we approach spring planting.  

If the market can continue its recovery, we may be able to push toward the $15 mark in old-crop soybeans, $5.40 nearby corn futures, and $6.72 for nearby Chicago wheat futures (which March futures were within 1/4 cent today).  These should be considered targets for advancing sales in old-crop contracts. For new-crop markets, $4.97 December corn and $12.06 

November soybeans are some targets which, if reached, would represent some sales opportunities for producers. 

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