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USDA Data Seen as Bearish for Soybean Markets

Corn closed up 6¢, soybeans lower.

DES MOINES, Iowa — The big piles of U.S. corn and soybean stocks are not getting very much smaller, as the year progresses, the USDA indicated Thursday.

As a result, the CME Group’s corn futures are trading mostly lower, following the release of the data.

At the close, the May corn futures settled 6½¢ higher at $3.93½. July futures finished 6¢ higher at $4.00½.

May soybean futures ended 1¼¢ lower at $10.64. July soybean futures settled 1¢ lower at $10.73.

May wheat futures closed 2¢ higher at $4.99¼.

May soy meal futures finished 0.10 per short ton lower at $383.40. January soy oil futures finished 0.26¢ lower at 31.84¢ per pound. 

In the outside markets, the NYMEX crude oil market is $0.94 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 43 points lower.

U.S. Data

In its March Supply/Demand Reports, the USDA pegged the U.S. 2017/18 corn carryout at  2.172 billion bushels, compared with the average trade estimate of 2.312 billion bushels and its February estimate of 2.352 billion.

For soybeans, the U.S. 2017/18 carryout is estimated at 555 million bushels vs. the average trade estimate of 530 million bushels and the USDA’s February estimate of 530 million.

USDA pegged the U.S. 2017/18 wheat carryout at 1.034 billion bushels vs. the average trade estimate of 1.015 billion bushels and its estimate last month of 1.009 billion bushels.

South American Production

In its report Thursday, the USDA pegged the Argentine 2018 soybean production at 47.0 million metric tons, compared with the average trade estimate of 48.36 million mt. and the USDA’s February estimate of 54.0 mmt.

Brazil’s soybean output is pegged at 113.0 million mt. vs. the average trade estimate of 113.82 mmt. and USDA’s estimate last month of 112.0 mmt.

The USDA sees Brazil’s 2018 corn production at 94.5 mmt. vs. the average trade estimate of 92.22 mmt. and USDA’s February estimate of 95.0 mmt.

Argentina’s corn crop is estimated at 36.0 mmt. vs. the average trade estimate of 36.58 mmt. and the USDA’s February estimate of 39.0 mmt. 


Trade Response

In general, the trade felt like the USDA would have needed to print an Argentine soybean number of 46.0 or 45.0 mmt to really make the market’s gyration interesting. Plus, since the USDA raised U.S. corn exports up 175 million bushels, it was seen as a friendly move.

However, USDA dropped U.S. soybean exports by 35.0 million bushels, a not-so-friendly move. Still, there is just a lot of world wheat, analysts say. As a result, that could keep a cap on corn rallies.

Brian A. Rydlund, CHS Hedging market analyst, says that the USDA report is friendly for corn, neutral for soybean market, and bearish for wheat. “For corn, there were no changes to the supply side of things. Demand for ethanol up 50 million bushels and is acceptable. The corn exports up 175 million bushels, so carryout cut accordingly 225 million bushels to 2.127 billion bushels. The average farm price, for corn set at 3.15-3.55, up 10¢ on low end,” Rydlund says.
For soybeans, no changes on the supply side. “With soybean crush raised 10 million bushels, exports cut 35 million bushels, the U.S. carryout moved up 25 million bushels. The trade thought carryout would go up and both adjustments are reasonable,” Rydlund says.

USDA pegged the avg farm price, for soybeans, at $9.00 – $9.60 per bushel, up 10¢ on both ends.  
Rydlund adds, “The report included no good news for wheat. The already big supply numbers didn’t change, exports were cut 25 million bushels, and that made carryout numbers go up 25 million bushels to 1.034 billion bushels. Anytime that we have a billion bushels, we have plenty.” 

Sal Gilbertie, Teucrium Trading owner, says that the combined effects of higher U.S. corn exports and increased demand for ethanol production on the projected U.S. corn balance sheet supported corn prices after today’s report.

“Some in the trade were surprised by the amount of corn exports estimated for the old-crop year, which probably contributed to much of today’s price increase. Attention will turn to the acreage report, at the end of this month, to see if corn prices manage to allow corn to keep more acreage than anticipated vs. soybeans in the coming year,” Gilbertie says.

Jason Ward, Northstar Commodity Research director, says that the best analysis of the USDA report came out of the U.S., not South America.

“USDA increased the corn used for ethanol figure by 50 million bushels to 5.575 billion bushels, and they also increased the corn exports by another 175 million bushels, a total increase in domestic corn usage of 225 million bushels. All of that came off the ending stocks which are now 2.127 billion bushels. This now gives us a very legitimate chance with similar acres to last year and trend line yields to take corn ending stocks below 2 billion bushels in 2018/2019. We’ll see about the acres for 2018 yet, but this increase in domestic usage should continue to bring money flow into the market,” Ward says.

World Corn Ending Stocks

“Realistically, with a record amount of corn acres in Brazil planted after March 1, we could see more downside to the Brazilian corn crop, but for February and March, USDA has chosen to move very slowly compared with the private sector,” Ward says.

U.S. Soybean Analysis

USDA cut exports again by 35 million bushels, but increased crush by 10 million bushels. So, U.S. supplies increased to 555 million bushels.

“There is nothing friendly about this number,” Ward says. “It came in 25 million bushels above trade estimates.”

Ward says that the World Supply scenario for soybeans was supportive.

“Brazil’s soy crop only went up to 113 mmt, up 1 mmt from last month’s 112 mmt and below last year’s record of 114 mmt. This is below nearly every trade estimate, and some were as high as 118 mmt. It is so friendly in the sense that it did not rise as much as expected,” Ward says.

Argentine soy prodution was 47 mmt, down 7.0 mmt, a sizable move to the downside for USDA standards.

“This was viewed as supportive even though we have seen 44 mmt from many private sectors. This could just be the first major decline by USDA with more to come in April, especially if we finish this month of March in a below-normal precip pattern,” Ward says.

World soy ending stocks came in at 94.4 mmt, down 3.7 mmt from last month. So, even with more domestic supplies of soybeans, this is a world and we have less soybeans in the world than last month. This will keep the length in the soybean market as long as there is expectation of lower production numbers in coming reports out of Argentina.

There is also some “doubt” now that maybe USDA is cutting U.S. exports by too much. We might have seen the highest domestic number of soybeans that we will get at 555 million bushels. We NEED to keep seeing strong crush numbers and good exports in the coming weeks.


USDA pegged U.S. supplies up 25 million bushels to 1.034 billion bushels. The wheat exports were cut by 25 million bushels. “Nothing supportive here,” Ward says.

World Ending Stocks of wheat came in at 268.9 MMT, up 2.8 MMT from last month. Also, nothing supportive for wheat, Ward says.

“The U.S. will likely remain noncompetitive in the export market, going forward, and upside will depend on spec movement out of short positions and acreage abandonment in the southern Plains,” Ward says.

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