** AgResource USDA March Crop Report Analysis: The USDA March Crop Report was viewed as bullish corn, neutral to bearish on soybeans and wheat. Funds were buyers on the initial CBOT break, and corn appears to be leading the charge higher at midday. Soybeans and wheat are lagging amid larger than expected US and world supplies. We look for a mixed CBOT close.
** CBOT Corn Analysis: The surprise of the USDA WASDE was the big increase in 2017/18 US corn exports of 175 Mil Bu! ARC and the industry had expected a 50 Mil Bu bump due to smaller Argentine/Brazilian production. However, WASDE decided to make a bigger adjustment which is catching the marketplace by surprise. Along with a 50 Mil Bu increase in US ethanol demand, total 2017/18 US corn demand was raised by 225 Mil Bu (14,820 Mil Bu) which dropped 2017/18 US corn end stocks to 2,127 Mil Bu. Such stocks are adequate with the annual US farm price raised up $.05 to $3.35/Bu.
However, remember that WASDE was forecasting a decline in 2018/19 US corn end stocks to 2,272 Mil Bu. Subtracting 175 Mil Bu due to enlarged old crop use would drop US new crop corn stocks to 2,097 Mil Bu with planted acres of 90 Mil acres and a yield of 174.0 BPA. An export adjustment is also needed.
If US 2018/19 US corn exports are adjusted upwards by 150 Mil Bu, 2018/19 US corn end stocks would fall to 1,950 Mil Bu, a stocks level that would place heightened importance on 2018 Central US weather and yield prospects.
World 2017/18 world corn stocks fell to 199 MMTs, the first time that world corn stocks have been below 200 MMTs since 2014/15. The stock fall included an Argentine corn crop of 36 MMTs and a Brazilian of 94.5 MMTs. Its feared that the Argentine corn crop could still drop another 3-6 MMTs (30-33 MMTs) with CONAB estimating the Brazilian corn crop at 87.3 MMTs. The point is that additional US corn export increases likely are ahead in future WASDE reports.
The price range for spot CBOT corn futures is raised to a range of $3.70-4.05 until more is known on US corn seedings and the spring seeding progress. The corn market is trying to prod producers to plant additional 2018 acres.
** AgResource Wheat Analysis: The USDA reduced 2017/18 US wheat exports by 25 Mil Bu to 925 Mil Bu. US wheat sales and exports have been lagging as Russian exports continue to gain. US hard red winter wheat exports were reduced 15 Mil Bu and spring 10 Mil Bu based on their noncompetitive price levels. The reduced US wheat export pace allowed WASDE to cut the average US cash wheat price to $4.65 with US 2017/18 US wheat end stocks rising to 1,034 Mil.
World wheat 2017/18 supplies were increased 500,000 MTs due to a larger crop in Kazakhstan. Russian wheat exports are projected at 37.5 MMTs, a record and 35% more than the prior year. Russia’s share of world trade is a record.
2017/2018 world wheat end stocks are record large at 269 MMTs which will act as a supply cushion for any new crop weather problems. Russia will be carrying in a record wheat stocks total of 14 MMTs!\
Further rallies in CBOT wheat will have to be based on adverse weather. ARC doubts that spot CBOT wheat can push too far above $5.25-5.50 resistance without adverse Black Sea weather. The Plains dryness will continue to get attention, but losses elsewhere in the world are needed to spur a more bullish wheat landscape. ARC research sees spot CBOT wheat in a range of; $4.50-5.25.
** AgResource Soybean Analysis: The USDA raised 2017/18 US soybean end stocks to 555 Mil Bu, up 25 Mil Bu. WASDE dropped US 2017/18 US soybean exports by 35 Mil Bu and raised crush by 10 Mil Bu to a record large 1,960 Mil Bu. The average cash price to be received by farmers stayed the same at; $9.30.
The Brazilian soybean crop was increased 1.0 MMTs to 113 MMTs, down 1 MMTs from last year’s record, while the Argentine soybean crop fell 7 MMTs to 47 MMTs. The net was a 6 MMTs fall in South American soybean production.
World 2017/18 soybean end stocks fell to 94.4 MMTs, down 3.8 MMTs from the February forecast. China’s soybean exports were left at 95 MMTs – which has been a steady forecast for many months. ARC would note that the Argentine crush estimate was cut to 43 MMTs with Argentine soybean exports to fall to 6.8 MMTs from 8.50 MMTs. ARC looks for further fall in the Argentine soybean crop of 4-6 MMTs which will further constrain Argentine crush/exports this summer.
AgResource doubts that May soybeans can reach rise $10.80-11.00 resistance with futures trading in a range of $10.30-10.80 into the March 31st US Planting Intentions Report. Longer term, a lasting bearish trend can only occur with a new crop US soybean yield of 50 BPA or more – which won’t be known until late summer. CBOT rallies are needed to spur Argentine farm sales after March 31!