USDA’s monthly report in March is typically a quiet affair. Moderate US demand changes for old crop and South American production are usually noted. The bigger market mover is typically the end of the month with quarterly Grain Stocks and the annual Prospective Planting reports. These two reports help the trade detail December – February old crop feed/residual usage and they update the conversation on potential new crop. USDA will not show new crop balance sheet numbers on this monthly report until May.
Corn: USDA left old crop US ending stocks unchanged from last month at 2.172 billion. The trade estimate was 2.159 (ALDL 2.172). There were no changes with corn for ethanol. Officially we are slightly ahead of USDA’s current view. They see the year +3.8% from last year. Ethanol production has run +4.5% so far. The remainder of the year needs to run +3.3%. The last few weeks have all run ahead of that needed goal. Given questions about demand the remainder of the year, and likely a small offset via annual improvements in efficiency gains, we can see why USDA passed the buck this month. There were no changes for exports this month. USDA’s current whole-year goal is -2% from the five year average. Sales have run -4%. The goal from here on out is +3%. We are on target given the prior seven weeks of sales are +7%. The coming 3/28 Grain Stocks report details old crop left over as of March 1. This report will be used to make any needed changes to feed/residual. That will be reflected on the next April 11 WASDE. In the big picture USDA’s old crop ending stock view has been quite consistent since the first estimate last May. 11 months of estimates so far have only ranged from 2.111 to 2.262 billion. We have yet to change our general concern with long term pricing. Any stock number over 1.8 billion implies pricing sub-$4.10 nearby futures. That was reached in February on the March contract. It eventually pushed to $3.94 ½ lows. We may be able to see pricing above economic value in the coming weeks given upcoming reproduction for Brazil’s big second crop and US planting risk. Our similar year studies also suggest a moderate rebound in the coming weeks. This is not expected to last though. There is also hangover pressure from the looming new crop issue. Early indications suggest corn acreage may not decline as much as needed. Though dry weather is forecast in the West ahead this summer, any reasonable yield hits may not be enough to change the balance sheet. USDA’s early view on new crop, 2.5 billion bushels via the AgForum conference, mirrors Allendale’s current 2.4. This would imply December futures to sub-$4.00 at harvest after any spring/summer risks.
World corn ending stocks were lowered from 322.1 million tonnes to 319.6. USDA lowered the Brazilian crop last month by 3 mt to 124. There was no change this month. The trade estimate was 122.0. Conab, Brazil’s government agency, will release their updated view on Monday. USDA’s Argentine estimate was raised by 1 to now 56.0 million tonnes. The trade expected no change at 55.0. The two exchanges in Argentina are at higher levels, 56.5 and 57.0. Light decreases were also noted the 2023 harvests for Russia, South Africa, Ukraine, and Mexico.
Soybeans:
2023/24: USDA left US old crop soybean stocks unchanged from last month at 315. The trade estimate was 319 (ALDL 335). Export sales are running below USDA’s current view. They see the year -13% from the five year average at 1.720 billion. That sounds okay given year to date sales are -15%. But it does not take into consideration the sharp problems over the recent seven weeks. The first six of those weeks were -72% from the five year average. Only the last week, reported on Thursday, was positive at +49% from average. We do not expect this one week to be the standard as Brazil’s pricing advantage remains. Allendale still remains concerned with this demand category. We suggest -50 million bushels may eventually be seen. USDA could have lightly raised domestic crush. Their current view is +4.0% from last year. Crush through January is +4.6%. A +5% or +6% estimate for the remaining months would add 19 to 32 million bushels vs. USDA. Our view is +30 million bushels vs. USDA. We compute a 250 stock as implying futures at $12.95, 300 at $12.20 and 350 at $11.65. The soon to expire March contract more than met the downside view with last month’s $11.15 low. Our similar year modeling does imply a temporary rebound into spring. As with corn there is an overhang from potential new crop numbers. USDA’s AgForum conference last month suggested 435, Allendale 401. Some of this concern has been lightly curtailed recently though. We may not see the acreage increase into soybeans to the extent that profit/loss would indicate.
World ending stocks were lowered from 116.0 million tonnes to 114.3. USDA slow-walked the Brazilian soybean crop lower last month, only -1 mt to 156.0. They did the same this month with a light decline to 155.0. The trade expectation was 152.3. We still expect another two months of declines from USDA with eventual numbers 148 – 152. Conab will update their view on Monday. For Argentina USDA left their view unchanged at 50.0. The trade estimate was 50.2. The two Argentine exchanges are at 49.5 and 52.5. It was interesting to note USDA raised their view of Chinese imports by a 3 mt, now at 105 for their October – September marketing year. This was a bit surprising. Their October – February imports were -5.9% from last year. The next few months will need to increase to +10.2% from last year to meet that view.
Wheat:
2023/24: US wheat ending stocks were raised by 15 million bushels to 673 million. The trade estimate was 657 (ALDL 658). The only change was a decline in their export view, from 725 million to 710. Though we are ahead of USDA’s view on sales that is not the trade focus. This week’s two overnight cancellations of previous US sales brings the conversation directly to shipments. To meet USDA’s current export view remaining shipments need to run +26% vs. the five year average. The past 32 weeks have seen shipments only at the five year average. This week’s report, covering last week’s activity, was -16%. US wheat prices are taking their cue from world pricing. This week Russian and EU pricing pushed to new downtrend lows.
World wheat ending stocks were lowered from 259.4 to 258.8 million tonnes. Light increases were seen for the completed harvests in Argentina, Australia and Russia. That was more than offset with higher export estimates.