Markets Eye Extended Winter Weather, Spring Planting, Analyst Says
It has been a bitterly cold winter, especially the past few months.
The temperatures seem to fluctuate between normal and ridiculously cold (well, well, well below normal).
It has been typical to see week-long forecasts predicting temps 10-20 degrees below normal - only to be followed by another week with 16-20 degrees below normal.
It’s been so cold, the ice has been looking for a place to warm up!
Just as spring comes, we have a bit of a 'thaw' as temps are now forecast to only be 2-6 degrees below normal - a miracle as far as most Midwesterners are concerned. Snow is now piled so high, only motorcycles can pass through many streets! Many upper Midwest farmers suffered through yet another storm that dropped 4-15" of snow, and now the attention turns to flooding risks as we froze up extremely wet last fall, and all this snow has to melt and go somewhere.
As typical of March, it has become another month of slow news in the ag markets, with some ancillary news about other countries joining with China in the grounding of the Boeing 737 jet that crashed in Ethiopia. But actually, that takes the pressure off China, who was the first country to do so to the American jet manufacturer.
U.S./China tensions have been the focus for some time due to the ongoing trade negotiations, so any additional tension seems to pressure the markets.
Weather is still forecast to be above normal precip across the U.S. the next seven days, but the Southeast and Northwest will see below normal precip. So, it’s nice
to see something else besides wet, wet, wet.
However, the 8-14 day is still calling for above normal precip in most of the Midwest. Temps are finally thawing a bit from the bitter cold we saw most of the last two months, with now only 2-7 degrees below normal temps in the next week (it was 16-20 degrees below normal last week!). It almost seems balmy. So, while temps are still forecast below normal, as least it isn't ridiculously cold this time of year. Temps are forecast to continue below normal in the 8-14 day forecast, but not quite so bitter cold.
South America’s Weather
South American weather is improving, although it’s probably too late to help any early crop. Precip is forecast above normal the next 7 days for southern Brazil, with below normal precip in northern Brazil and Argentina. The 8-14 day calls for above normal precip in almost all of Brazil, but below normal for Argentina. Temps are normal for Brazil, and above normal for Argentina, for the entire 14 day forecast. Overall, this is a decent forecast to finish off soybeans and allow harvest to progress normally.
China, U.S. Trade
China wants a final deal done before scheduling the Florida meeting of the two Presidents to sign the deal, so that is delaying the expected March 27 meeting until later.
It is obviously worried about its stock market reacting negatively, if a deal is not made. So the preparations for the meeting between the two presidents will drag on, as it can't really be done until the negotiations are all done between the two sides.
USDA Report Recap
USDA put out the USDA March report Friday at 11 am, with corn ending stocks up 100 mb (to 1.835 billion), soybeans down 10 mb (to 900 mb), and wheat up 45 mb
(to 1.055B). Essentially, the wheat and corn numbers were a bit higher than the expected increases, while soybeans was as expected.
World ending stocks were down 1.3 mmt corn (to 308.5 MMT), soybeans up 0.5 mmt (to 107.2 mmt), and wheat +3 mmt (to 270.5 mmt). The market didn't react much to the report, though, with soybeans down 6c, corn -1c, and wheat posting small gains.
But typically, the March report is perhaps the least important of the year.
A delayed cattle on feed report was also out Friday, with the Feb. numbers showing 100% on feed (-0.2% from expectations), placements 95% (+2.4% from expectations), and marketings 103% (+.7% from expectations).
Overall, it was a pretty neutral report other than the higher placements.
USDA March Planting Report Preview
The next report that should matter is intended U.S. acreage on March 30. Pro Ag expects less acreage shifting from soybeans to corn/HRS wheat than expected as our surveys showed very little acreage shift in the upper Midwest.
In reality, the acreage shift isn't nearly as important as the China trade deal; we need that 25 million acre customer back purchasing our product.
If China honors its commitment to buy even more U.S. product than before, it might be more like a 30+ million acre customer in the future.
Ray can be reached at email@example.com.
Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm
in the country.
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