Report Reaction: Limited Market Reaction to USDA's Carryover Updates

Posted on 03/08/2019 11:36 AM

Market reaction

Ahead of USDA's report, corn futures were trading around a penny lower, soybeans were 5 to 6 cents lower, winter wheat futures were 4 to 7 cents higher, spring wheat futures were 1 to 3 cents lower and cotton futures were around 50 points higher.

In reaction to the reports, corn futures are still trading around a penny lower, soybeans are 4 to 5 cents lower, winter wheat futures are mostly 1 to 2 cents higher, spring wheat futures are 1 to 2 cents lower and cotton futures are near unchanged.

 

U.S. carryover

Corn: 1.835 billion bu. for 2018-19; up from 1.735 billion bu. in February
Beans: 900 million bu. for 2018-19; down from 910 million bu. in February
Wheat: 1.055 billion bu. for 2018-19; up from 1.010 billion bu. in February
Cotton: 4.3 million bales for 2018-19; unchanged from 4.3 million bales in February

USDA raised its corn ending stocks projection 100 million bu. from last month and stocks came in 99 million bu. higher than the average pre-report trade estimate. USDA made no changes on the supply side of the balance sheet. For demand, USDA cut projected food, seed & industrial use by 25 million bu. (to 7.015 billion bu.) with all of the reduction in ethanol use (now at 5.550 billion bu.). Projected exports were cut 75 million bu. from last month (now at 2.375 billion bu.) due to reduced U.S. price competitiveness and expected higher shipments from South America. USDA now projects the national average on-farm cash corn price at $3.35 to $3.75, steady on the bottom end of the range and down a dime on the top end of the range from last month.

USDA reduced its soybean carryover forecast by 10 million bu. from last month and the figure came in 2 million bu. below the average pre-report estimate. USDA made no changes on the supply side of the balance sheet. It raised total use 10 million bu. on higher projected crush (now at 2.100 billion bu.). USDA’s national average on-farm cash soybean price is $8.10 to $9.10, unchanged from February.

USDA’s wheat ending stocks figure climbed 45 million bu. from last month and came in 35 million bu. higher than the average pre-report estimate. USDA increased supplies by 5 million bu. on a higher import forecast. On the demand side of the balance sheet, it trimmed projected food use 5 million bu. (to 965 million bu.) and cut exports 35 million bushels (to 965 million bu.). USDA now projects the national average on-farm cash wheat price at $5.10 to $5.20, up a nickel on the bottom end and down a nickel on the top end of the range from last month.

USDA’s cotton ending stocks forecast was unchanged from last month, which was 120,000 bales lower than the average pre-report estimate. USDA made no changes to the supply or demand sides of the old-crop balance sheet. USDA now projects the national average on-farm cash cotton price at 69 cents to 71 cents, down 2 cents on both ends of the range from last month.

Global carryover

Corn: 308.53 MMT for 2018-19; down from 309.78 MMT in February
Beans: 107.17 MMT for 2018-19; up from 106.72 MMT in February
Wheat: 270.53 MMT for 2018-19; up from 267.53 MMT in February
Cotton: 76.09 million bales in 2018-19; up 75.5 million bales in February

 

Global production highlights

Argentina beans: 55.0 MMT for 2018-19; compares to 55.0 MMT in February
Brazil beans: 116.5 MMT in 2018-19; compares to 117.0 MMT in February
Argentina wheat: 19.5 MMT in 2018-19; compares to 19.2 MMT in February
Australia wheat: 17.3 MMT in 2018-19; compares to 17.0 MMT in February
China wheat: 131.43 MMT in 2018-19; compares to 131.43 MMT in February
Canada wheat: 31.8 MMT in 2018-19; compares to 31.8 MMT in February
EU wheat: 137.6 MMT for 2018-19; compares to 137.6 MMT in February
Russia wheat: 71.69 MMT for 2018-19; compares to 71.6 MMT in February
Ukraine wheat: 25.0 MMT for 2018-19; compares to 25.0 MMT in February
China corn: 257.33 MMT for 2018-19; compares to 257.33 MMT in February
Argentina corn: 46.0 MMT for 2018-19; compares to 46.0 MMT in February
South Africa corn: 11.0 MMT for 2018-19; compares to 11.5 MMT in February
Brazil corn: 94.5 MMT for 2018-19; compares to 94.5 MMT in February
China cotton: 27.5 million bales for 2018-19; compares to 27.5 million bales in February

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