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U.S. March Soybean Stocks Hit Record High, USDA Data Drops Markets

U.S. 2019 corn acreage comes in above USDA’s previous thoughts.

DES MOINES, Iowa — The U.S. has the most soybeans in storage, while corn stocks are the third-largest ever, according to the USDA.

Meanwhile, U.S. farmers are expected to plant more corn and fewer soybeans than expected.

As a result, the CME Group farm markets have reacted negatively to the USDA reports on Friday.

At the close, the May corn futures finished 17 1/2¢ lower at $3.56 1/2. July corn futures ended 17 1/2¢ lower at $3.66 1/4.
May soybean futures ended 5 1/4¢ lower at $8.84 1/4. July soybean futures closed 5 1/4¢ lower at $8.97 3/4.

May wheat futures finished 6 3/4¢ lower at $4.57 3/4.

May soymeal futures closed unchanged at $306.50. May soy oil futures closed 0.27 lower at 28.36¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.90 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 148 points higher.

Quarterly Grain Stocks

In its March Quarterly Grain Stocks Report, the USDA pegged the U.S. soybean stocks, as of March 1, at 2.72 billion bushels vs. the average trade estimate of 2.683 billion bushels and 2.109 billion a year ago.

The previous March 1 soybean stocks totaled 2.109 billion bushels in 2018.

The U.S. corn stocks were pegged at 8.60 billion bushels vs. the avg. trade estimate of 8.335 billion bushels and 8.892 billion at this time a year ago.

For wheat, the USDA sees the U.S. March 1 stocks at 1.59 billion bushels vs. the avg. trade estimate at 1.555 billion and a-year-ago stocks at 1.495 billion.

U.S. Quarterly Grain Stocks (billion bushels) Corn Soybeans Wheat
USDA March 1, 2019 8.60 2.72 1.55
Avg. Trade Estimates 8.335 2.683 1.55
March 1, 2018 8.892 2.109 1.495

U.S. 2019 Acreage

In its March Prospective Planting Report, the USDA pegged U.S. corn acreage at 92.79 million vs. the average trade estimate of 91.332 million and the USDA’s February estimate of 92.0 million.

For soybeans, the USDA sees 2019 acreage at 84.6 million vs. the trade’s expectation of 86.16 million and the USDA’s February Outlook estimate of 85.0 million.

Wheat acreage came out at 47.33 million acres vs. the trade’s expectation of 46.915 million and the USDA’s February projection of 47.0 million.

U.S. 2019 Planted Acres (millions of acres) Corn Soybeans Wheat
USDA March 1, 2019 92.79 84.6 47.33
Avg. Trade Estimate 91.332 86.16 46.9
USDA February 92.0 85.0 47.0

Trade Reaction

Britt O’Connell, Commodity Risk Management Group cash adviser, says that the reports are price-negative.

“Corn planted acres are up 4% from last year to 92.8 million acres. Soybean acreage estimated at 84.6 million acres. This was on the high side of corn estimates, heading into the report and on the low end of estimates for soybeans. Corn market is down hard –trading down 10 – and beans are flat,” O’Connell says.

Sal Gilbertie, Teucrium Trading, says that the higher than expected corn stocks and lower corn disappearance numbers took a toll on corn prices after the report.

“That data dragged the entire grain complex down, even though wheat and soybean numbers were largely neutral versus expectations,” Gilbertie says.

Gilbert added, “Traders will wonder what extent the flooding will have on inventory and planting numbers moving forward. Also, the U.S./China trade negotiations, coupled with the weather headed into planting season will determine prices from this point forward. Bears seem in control for now, but flood losses, ethanol plant restarts, and Chinese buying could put an end to downward price momentum in the weeks ahead.”

Jack Scoville, PRICE Futures Group, says that clearly the corn data was considered very bearish.  

“Stocks numbers were above the average trade guess due to less feeding, which is always a surprise given the animal numbers out there.  And the plantings intentions report might have been reasonable a month ago, but with all of the rain now and with a wet spring in the forecast I view it as very suspect,” Scoville says.  

Scoville adds, “It could drop pretty easily to 91 million.  It was interesting to see the cut in spring wheat acres, not sure how to handle that one yet.  I had no problem with bean stocks, we should know due to better demand reporting and we did.  The beans planted area could go up a million acres or so.  I think the corn reaction is extreme and we will see buying surface once the fund and other selling subsides.”

Jason Roose, U.S. Commodities, says that the larger corn acres and and larger grain stocks continue to take premium out of the market.

“With very little risk premium added going into spring, the 3 percent increase of corn stored on farm from last year continues to be an anchor. Soybean acres are anticipated to be smaller than last year at 84.6 mln acres, which is considered friendly, but stocks are up 29 percent from last year which will limit rallies temporarily,” Roose says.

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