Market News

Wheat, corn up after USDA numbers

Soybeans were mixed, mostly higher, on bull spreading. The USDA raised U.S. ending stocks on expectations for slower crush demand and cut the production guess for Argentina. There was no change to Brazil’s crop, but exports were above a month ago. CONAB raised its estimate for Brazil slightly, now at 152.89 million tons, noting lower yields in southern areas were being canceled out by better performance in Brazil’s Midwest. The Rosario Grain Exchange has soybean production in Argentina at 34.5 million tons. The USDA held China’s imports steady at 96 million tons. How much of that will come from the U.S. is a question mark because of diplomatic tensions and the record expected crop out of Brazil. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. Even though the USDA cut its domestic crush outlook, pulling meal and oil production prospects lower, margins remain in positive territory.

Corn was modestly higher on fund and technical buying. While U.S. ending stocks were slightly larger than the average pre-report guess due to a reduction in ethanol use, but it looks like that was largely factored in, with many analysts expecting that change last month too. The USDA left Brazil’s corn crop steady while raising exports, but lowered exports and production for Argentina. CONAB has Brazil’s total crop at 123.744 million tons, down modestly from January on slight reductions for the second and third crops, now at 94.967 million and 2.315 million tons, respectively. Second crop corn planting is slower than average because of soybean harvest delays. The Rosario Grain Exchange has Argentina’s corn crop at 42.5 million tons. USDA did raise corn exports for Ukraine. The U.S. Energy Information Administration says ethanol production last week averaged 1 million barrels a day, down 28,000 from the previous week, but up 6,000 from this time last year, with a domestic supply of 24.417 million barrels, a decline of 25,000 from a week ago and 382,000 from a year ago.

The wheat complex was higher on commercial and technical buying, along with mostly lower trade in the dollar during the session. U.S. ending stocks were up, but lower than expected, leaving the report neutral, with only minor adjustments. Specifically, food use was down 2 million bushels, while seed use was up 1 million bushels. Globally, production was up for Australia and Russia, with higher exports for those nations plus the European Union and Ukraine. The trade is waiting to see if the Black Sea Grain Initiative is extended past its mid-March expiration date. Russia continues to hold most of the global wheat market share and while exports are still moving out of Ukraine, the pace has been cut by slower Russian inspections. Domestically, weather in hard red winter growing areas remains a big concern for crop potential, while soft red winter development generally looks better. China says it will offer 140,000 tons of wheat from state reserves at its next auction on the 15^th. The USDA’s weekly export sales report is out Thursday morning.