Corn Prices at or Below the Cost of Production in Brazil & Planting Intentions and Quarterly Stocks - Thursday, 30 March 2017

The March Planting intentions report will be publicized tomorrow and the trade has been debating the number of corn acres the agency will announce for quite some time.  It is difficult to second guess where the USDA number may be, last year the agency placed the planting intentions number +3.6 million acres higher than what the trade had been anticipating and in 2008 the agency’s estimate was -1.3 million acres less than expected. There is no argument regarding the Quarterly Stocks numbers, expectations are that the current supplies are likely to be record large at approximately +650 - +750 million bushels more than on March 1st, 2016. 

Most sources are looking for a record number of soybean acres, somewhere between 88 and 90 million acres in tomorrow’s report.  The USDA has a history of underestimating the total number of soybean acres in this March report. For example, in 2012 the agency underestimated the soybean acreage by -3.2 million acres.  So if the agency comes in at a number lower than what the trade anticipates, the effect on the market will likely be short-lived as the USDA will adjust the total acreage number higher as the season progresses.  The Quarterly Stocks for soybeans are also expected, like corn, to be at record levels around +150 million bushels more than just one year ago at this time.

USDA March 31, 2016 Quarterly Stocks & Prospective Plantings Worksheets

March Quarterly Grain Stocks

 

March #

Avg. Trade Est.

Trade Range

USDA March 1, 2016

USDA Dec. 1, 2016

Corn

???

8.534

8.205 - 8.900

7.822 

 12.384

Soybeans

???

1.684

1.627 - 1.885

1.531

2.895

Wheat

???

1.627 

1.450 - 1.721 

1.372

2.073 

March Prospective Planting

 

March #

Avg. Trade Est.

Trade Range

USDA 2016

USDA 2017 Outlook Forum

Corn

???

90.969

90.0 - 92.50

94.004 

90.0

Soybeans

???

88.214

86.400 - 89.300

83.433

88.0

All Wheat

???

46.139

44.200 - 48.200

50.154

46.0

Winter Wheat

???

32.554

32.000 - 34.500

36.167

NA

Spring

???

11.358

9.900 - 12.200

11.605

NA

Durum

???

2.115

1.900 - 2.500

2.412

NA

We’ve all heard about the record yields found in Brazil this season and now corn prices are falling to at or below break-even prices as a result.  The Soybean and Corn Advisor reports that producers in Mato Grosso, Brazil are concerned that although they may have harvested a record large crop they may end up losing money.  Prices in many regions of the state are half or in some cases less than half of the prices found a year ago.  According to the Soybean & Corn Producers Association of Mato Grosso, the average corn price in mid-March ranged from approximately $2.90 to $3.30 per bushel.  This compares to the price last year at this time of approximately $5.85 per bushel.  The Mato Grosso Institute of Agricultural Economics (Imea) has estimated that the cost of production for high tech seed corn varieties is around $3.00 per bushel, as a result of the deficit only 39% of this year’s production has been forward contracted, compared to last year when 81% had been priced.  The situation is even worse in some regions of the state.

The Bird Flu was found in the U.S. several weeks ago in Wisconsin, Alabama and Tennessee.  Now, a commercial bird farm in Georgia, the nation’s largest producer of boilers, has reported its first case of the flu.  The strain, H7 avian flu is less concerning that the high-pathogenic flu that is a deadly strain in poultry but Julie, McPeake, a spokesperson for the Department of Agriculture said, “This particular strain, however, has the potential to mutate into the high-pathogenic, which is why the state is taking no risks.”

A continuous procession of rainfall will march eastward across the country.  The map below shows the percent of normal rainfall for the nation’s midsection.  There are currently 2 major rain events for the southern Plains forecasted during the next 7 days, total precipitation could approach an entire months of rainfall in the affected area.  

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