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USDA Data Moves Ag Markets Mostly Lower Friday

The U.S. has more corn and wheat vs. expectations.

DES MOINES, Iowa — The U.S. stockpiles of corn and wheat are growing, according to the USDA’s Friday release of March data.

As a result, the CME Group corn, soybean, and wheat markets closed mostly lower.

At the close, the May futures finished 1¢ lower at $3.64¼. July futures finished 3/4¢ lower at $3.73½.
 
May soybean futures ended 6¾¢ lower at $8.95¾. July soybean futures settled 6¾¢ lower at $9.09¾.

May wheat futures ended 1¼¢ higher at $4.39.

May soymeal futures closed 2.60 per short ton lower at $303.70. May soy oil futures ended 0.02 lower at 29.65¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.69 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 119 points lower.

U.S. Ending Stocks

In its Supply/Demand and WASDE Reports, the government agency estimated the U.S. 2018/19 corn ending stocks at 1.835 billion bushels vs. the average trade estimate of 1.75 billion bushels and the USDA’s February estimate of 1.735 billion.

For soybeans, the U.S. 2018/19 ending stocks were estimated at 900 million bushels vs. the trade’s expectation of 898 million and the USDA’s previous estimate of 910 million bushels.

The USDA pegged the U.S. 2018/19 wheat ending stocks at 1.055 billion bushels vs. the average trade estimate of 1.02 billion bushels and the USDA’s February estimate of 1.01 billion.

World Ending Stocks

On Friday, the USDA pegged the World 2018/19 corn ending stocks at 308.5 million metric tons vs. the trade’s expectation of 309.1 million metric tons and the USDA’s February estimate of 309.8 mmt.

For soybeans, the world 2018/19 soybean ending stocks were pegged at 107.1 mmt. vs. the trade’s expectation of 106.3 mmt. and the USDA’s February estimate of 106.7 mmt.

In its report, the USDA pegged the world’s 2018/19 marketing year wheat ending stocks at 270.5 mmt. vs. the trade’s estimate of 267 mt. and the USDA’s previous estimate of 267 met.

South America’s Crop Estimate

The USDA pegged the 2018-19 Brazilian soybean output at 116.5 million metric tons vs. the trade’s expectation of 115.4 mmt. and the USDA’s February estimate of 117.0 mmt.

Argentina’s soybean output, for this same year, is pegged at 55.0 mmt. vs. the average trade estimate of 55.2 mmt. and the USDA’s February estimate of 55.0 mmt.

Brazil’s 2018-19 corn output is pegged at 94.5 mmt. vs. the trade’s expectation of 94.6 mmt. and the USDA’s February estimate of 94.5 mmt.

For Argentina’s 2018-19 corn output, the USDA estimates it at 46.0 mmt. vs. the trade’s expectation of 46.0 mmt and the USDA’s February estimate of 46.0 mmt.

Trade Response

Britt O’Connell, Commodity Risk Management Group cash adviser, says that the USDA’s corn ending stocks were raised 100 million bushels to 1.835 billion. “The report shows reductions in corn used for ethanol production as well as reduced exports. No large surprises here as the market seemed to expect both of these,” O’Connell says.

Ethanol margins have been slim to negative for the 2019 year thus far, O’Connell says.

“The U.S. was able to pick up Argentina’s share of corn exports last year, as it suffered a tremendous drought. With both Brazil and Argentina expected to have great corn crops, they will likely take back their share of exports. We are also a little less competitive on a global scale than we had been at the beginning of the year,” O’Connell says.

In the report Friday, soybean ending stocks dropped slightly to 900 million bushels, a drop of just 10 million.

“Crush margins had continued to be healthy resulting in an increase by 10 million to this space. At some point, the USDA has to adjust exports on soybeans unless a miracle deal comes through with someone to buy. It (USDA) has been kicking the can down the road on this for months. Maybe it knows something we don’t. Still leaves beans vulnerable – net/net. Nothing big by way of changes or surprises. Corn is testing lows from last week. Let’s hope they hold,” O’Connell says.

Jack Scoville, PRICE Group, says that the USDA Report sparked an interesting market reaction.

“The numbers were bearish, no doubt about it, but the reaction was very measured. There is no reason to buy anything based on the USDA estimates, as demand was cut in a lot of places. But the speculative traders are already so short that the market could not react much. Might be a sign we are running out of sellers and need to pop things a bit in the next couple of weeks,” Scoville says.

Jason Roose, U.S. Commodities, agreed that the Crop Production report provided no bullish surprises.

“The surprise was the 25 million bushel reduction in ethanol usage and the 75 million bushel reduction in exports which increased the corn ending stocks to 1.835 bln. Crush was up 10 million for the soybeans which was friendly for demand but the ending stock figure still unable to break the 900 mln level, which is still considered bearish limiting rallies,” Roose says.

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