Corn and soybeans got a fundamental boost from some bullish USDA numbers on Friday and followed through mostly thanks to the crude spike on Monday, but have failed to build on the recent rally since. U.S. forecasts have been brutal for early fieldwork (including small grain and spring wheat planting) so far, but that trend looks to be reversing course in a big way, at least through the middle of the month. Midwest farmers will take advantage with first corn planting dates arriving today for the southern third or so of the belt, and the bulk of the belt by early next week.
Snow remains in the far north this morning with severe storms and rains stretching from the southern U.S. up through the ECB; amounts proved a bit lighter than expected yesterday save for extremely heavy snow in SD, with action moving out through the SE belt today (and leaving the central and southern Plains dry). Conditions look drier now for the next ten days, back to wetter chances again for the 11-15 day. Temps linger above normal throughout the middle of the month, after recovering over the next couple days.
Brazilian weather forecasts look ideal with drier conditions south favoring soybean harvest, and rain chances east/northeast through the weekend and again next week aiding any dry safrinha corn areas.
One of the ongoing effects from last week’s quarterly stocks report is the elevated need for rationing in the market, mainly on soybeans. The current stocks to use ratio on soybeans is at 4.8% and a level that requires price rationing. Demand for US soybeans has slowed in recent weeks, but we continue to see sales run above the volume needed to reach yearly USDA projections. This comes even with the United States being $65.00 per ton higher than Brazil in the global market. The quarterly stocks for March 1st came in at 1.685 billion bushels which was at the low end of trade guesses. This has some analysts thinking last year’s soybean crop may have been overestimated, and total US stocks will be lower at the end of the marketing year. A few believe we could eventually see old crop ending stocks of 190 million bushels in future balance sheet updates. While we have seen this lower in recent years, demand is higher this year, which narrows our stocks to use ratio. Trade is also closely monitoring US wheat balance sheets and believe we could get to a rationing level on that grain as well. There is less concern on corn stocks to use where a large US crop is projected this year.
Have a great day!