New Spring and Summer Predictions and USDA Worksheets - Thursday, 17 March 2016

Last Wednesday, March 9th the USDA updated the ending stocks numbers.  The domestic balance sheet for corn was left unchanged along with South America, South African production was reduced to 6.5 MMT from 7 MMT.  The World Ending Stocks saw a reduction to 207.0 from February’s total of 208.81. 

U.S. soybeans saw an increase of 10 million bushels from 450 to 460 million bushels, while the world ending supply saw a decrease from the February number of 80.42 to 78.9.  The domestic crush number was lowered by 10 million bushels, U.S. exports were left unchanged while Chinese soybean imports rose from 80.5 to 82.5.

USDA Supply and Demand Wednesday, March 9, 2016 Worksheets

2016 U.S. Ending Stocks

 

March #

Average

Trade Range

USDA Feb.

Corn

1.837

1.854

1.812 - 1.887

1.837

Soybeans

0.460

0.452

0.440 - 0.466

0.450

Wheat

0.966

0.975

0.951 - 0.991

0.966

2016 World Ending Stocks

 

March #

Average

Trade Range

USDA Feb.

Corn

207.0

209.08

207.15 - 210.00

208.81

Soybeans

78.9

80.89

80.00 - 82.00

80.42

Wheat

237.6

238.77

236.00 - 240.00

238.87

South American Production

 

March #

Average

Trade Range

USDA Feb.

Brazil
Corn

84.0

84.50

82.50 - 87.00

84.00

Brazil
Soybeans

100.0

100.13

98.60 - 101.00

100.00

Argentine
Corn

27.0

27.23

26.50 - 28.00

27.00

Argentine
Soybeans

58.50

58.85

58.50 - 59.75

58.50

 

Corn has managed a small rally off the lows but continues to remain range bound as it has all year, varying from $3.50 - $3.80 per bushel.  Fundamentally there has been no significant changes to stimulate a price rally, in fact South America looks to plant more acres than what the trade had originally expected.  The extreme rainfall totals seen across the Gulf Coast last week has delayed planting progress in those areas, producers in Georgia are concerned because typically corn planted after March 15th often sees a significant yield loss.  As planting season approaches key growing states in the Midwest the weather forecasts will capture even more attention.

Soybeans are now beginning to see better crush demand for meal according to new NOPA data and bean oil is also finding strength and moving higher from prices last fall.  Market bears feel though that this crush number is too high due to the meal substitutes that are being imported into the U.S. creating competition and skewing numbers. Crush margins in China are declining which gives us little confidence that we will see any increase in export demand from China for the near-term. 

The forecast from NOAA for March through May predicts that the northern section of the country can expect to see warmer than average temps with a small area in the Southwest will find cooler than average temps.  The eastern Corn Belt can look for drier conditions than normal while the West should prepare for wetter than normal conditions. There are varying degrees of certainty about when the transition from El Nino will occur and what exactly will replace it when that transition happens.  NOAA is currently looking for the Northern Hemisphere to transition to an ENSO or neutral conditions by late spring and early summer.  With a 40% chance of a La Nina pattern from August through October. 

Kyle Tapley, a senior agricultural meteorologist with MDA Weather Services looks for a shift in El Nino to moderate intensity by late spring and then expects a fast transition to La Nina.  He pointed out that “there is still a large spread in the model solutions for summer and fall.  While a vast majority of models show at least negative/neutral ENSO conditions by mid to late summer, several now show full-fledged La Nina conditions by summer.” 

The Climate Prediction Center and the International Research Institute for Climate and Society has forecasted the probabilities for El Nino, La Nina and ENSO for May, June and July as:

  • 10% chance for La Nina
  • 46% chance for ENSO-neutral
  • 44% chance for El Nino

Typically El Nino and La Nina events last between 9-12 months (but can last for up to 2 years) and usually return every 2-7 years.

 

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