Nearly all of the early trade today has been last minute positioning ahead of the USDA’s quarterly stocks and planting intentions reports. It is not uncommon to see a significant reaction to these numbers in the market, with the average move being in the double digits. As for the direction, there is little clear indication. Many analysts are expecting a friendly market reaction given the already large short position the funds are holding. Once this data is released trade will revert to monitoring weather and field reports ahead of the spring planting season.
The average estimates for corn in today’s report is 8.335 billion bu on stocks and 91.33 million acres. The most attention is on acres, as thoughts are recent weather conditions will limit the number of acres planted to that crop. Corn traders are also monitoring the South American crops, as analysts have started to increase production forecasts for both Argentina and Brazil. The International Grains Council has reduced its world corn stocks though, as it feels demand will outpace production for the 2nd year in a row.
Soybean number estimates today are for 2.68 billion bu of stocks as of March 1st and 86.17 million planted acres. This acreage number is being heavily contested with nearly all analysts expecting a higher figure. Any stocks number today is going to be contested as well, as recent demand has been much less than projected. At the present time soybean crush appears to be over-estimated by 100 million bu and exports over-stated by 300 million bu. If accurate, this alone would push ending stocks well above the 1 billion bu mark. Rumors flowed through the pit yesterday that China had bout 1.5 mmt of soybeans for state reserves, but a lack of confirmation has limited the ongoing response.
Average wheat expectations for today’s data release are 1.55 billion bu of reserves and 46.9 million planted acres. Neither of these are bullish nor bearish in today’s market environment. The technical picture broke-down in yesterday’s session which gave us our lower closes. This really was not that surprising given the strength we have seen in the wheat complex up to this point. Improving export numbers are keeping a floor under wheat values, as are thoughts acres may fall short of expectations given spring weather outlooks for the Plains.
This commentary is the sole opinion of Karl Setzer. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to contact Karl Setzer at 800.858.3738, extension 411, or at firstname.lastname@example.org . You can also follow Karl on twitter; @ksetzergrains