Today’s Prices
Grain prices finished mostly sharply lower on the day today as USDA failed to provide fresh bullish news.
Grain Market News
South American 2022 Production
Turning to the South American production, USDA left Brazilian corn production unchanged from last month. The trade thought that production would be lowered
Argentina corn was lowered by 1mmt, the trade thought it would be lowered by 2. So south American corn production was not lowered as much as expected so that was considered lightly negative.
Turning to soybean production, Brazilian production came in at 127mmt that was down 7mmt from last month, and a little lower than the trade was expecting.
Argentina soybean production came in at 43.5mmt, that was down 1.5mmt from last month, but not down quite as much as expected.
Bottom line is South American soybean production was lowered about what the trade was expecting.
U.S. and World Ending Stocks: 2021-22 Crop Year
Turning to USDA ending stock numbers,
US corn ending stock came in at 1.44 billion bushels, that was slightly below what the trade was expecting and down 100 million bushels from last month.
Soybean ending stocks came in at 285 million bushels, that was above what the trade was expecting, and it was down 40 million bushels from last month. The trade was expecting a larger decline in soybean ending stock.
Wheat ending stock came in at 653 million bushels, that was up 5 million bushels from last month, the trade thought it would be down 15. So therefore, the wheat number was considered slightly negative.
World ending came in above expectations, world corn stocks at 301 were 1.4 million above trade expectations. Global soybean stocks at 90, 1.1 above the trade expectations and global wheat at 281.5, 3.5mmt above what the trade was expecting.
Bottom line world ending stocks did come in above expectations and considered lightly negative in todays report.
Corn Balance Sheet
USDA did not change production, that was known, and USDA did not change any of the supply numbers including imports.
On the demand side, USDA did raise corn use for ethanol by 25 million bushels and raised exports by 75 million bushels. That allowed our ending stocks to drop by a 100 million bushels from 1.54 to 1.44 billion bushels.
This was slightly below what the trade was expecting, but not a major surprise.
Soybean Balance Sheet
Turning to the soybean balance sheet, USDA did not change the supply side of the balance sheet and only made one significant change on the demand side.
That was increasing exports by 40 million bushels, that resulted in ending stocks dropping by 40 million bushels to 285. That was not as large as the trade was expecting and was considered lightly negative.
Wheat Balance Sheet
On the supply side production of the wheat balance sheet wasn’t changed, but the USDA did lower imports by 5 million bushels.
On the demand side USDA lowered exports by 10 million bushels, the bottom line is that ending stock increased by 5 million bushels. The trade was expecting a decrease; therefore, the wheat balance sheet is considered somewhat negative.
Grain Market News
2-Week Forecast Map
This map shows precipitation in South America, it shows good precipitation expected for Brazil’s suprema corn crop this week as well as next week.
That crop was planted timely, and if they do get rains as expected they should have a good start.
7-Day Precipitation Forecast
Over the next 7 days in the US there is some moisture expected in the central and portions of the southern plains.
A good share of Kansas in the dark green could get a quarter to a half inch and maybe isolated heavier totals, this would be combination of melted snow and rains. With some areas expecting 4.6 inches of snow.
This is not a game changer for moisture for the hard red winter wheat crop, but any moisture in this area will be welcome.
Weekly Ethanol Production:
Ethanol production rebounded nicely form last week up to 1.028 million barrels per day and that’s above USDA needed level.
We need to be producing about 1.019 million barrels per day and this includes USDA’s 25-million-bushel increase.
With ethanol prices treading anywhere from 80-90 cents and occasionally a $1 per gallon below the gasoline price, we can expect ethanol production to remain strong if that relationship continues.
Weekly Stocks of Fuel Ethanol
Stocks of fuel ethanol did increase up to 25.821 million barrels, that was seen as lightly negative as our ethanol stocks are record large for mid-March.
Today’s ethanol production report was considered neutral, ethanol production was good but the increase in stocks was somewhat disappointing.
March Corn Chart
Corn prices had a sharp down day, now we didn’t make a new low, did not take out yesterdays low, but we did make a new low close at 7.33. That’s almost 50 cents below the high that was posted last week on Friday.
From a chart perspective, the chart is looking slightly negative and slightly toppy, technical indicators have turned down as well.
Chart and technical would certainly tell us that there may be some additional downside risks in the near term, but before we get overly barrish we are expecting this market to remain extremely volatile in the next few months.
Current chart support may be eying a gap in the market from a week ago, which is around the 6.85-6.88 level. That’s 40-50 cents below where we traded today.
Even if the market did trade down into the gap level to fill that gap, the overall trend is still and uptrend.
March Soybean Chart
Soybean prices rallied today to a new high for this move, we were unable to take out the high at 17.59 from about 2-weeks ago but that was a new high for the move.
Markets turned around closing significantly lower, the close at 16.71 was 63 cents off the daily high. It was certainly a disappointing close for soybeans.
We can’t rule out a further correction to the downside, but as I mentioned in corn, we expect the soybean market to remain extremely volatile.
Current chart support would be at the lows posted last week at 15.79, overhead resistance at 17.59. Anything in this range is fair game as we expect extreme volatility over the next few weeks or months.
March KC Wheat Chart
Wheat prices certainly look like there is some topping action in the chart and the technical indicators look toppy as well.
There certainly could be some additional downside as there was virtually no chart point from todays close all the way down to the upper $9 level.
Anything within that range is certainly possible on a further chart correction, but wheat as well is expected to remain extremely volatile in the weeks maybe even months to come.
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