USDA Worksheet & Spring Outlook - Tuesday, 27 March 2018

Update for March 27th, 2018

The big story in the trade this week is the Thursday, March 29th USDA 2018 Prospective Plantings Report and the March 1st Grain Stocks numbers.  Generally the acreage report has a bigger impact on new crop values while the quarterly grain stocks estimate can influence both the old and new crop. The worksheet is shown below.

 

USDA March Planting Intentions (million acres)

 

USDA

Mar 2018

Average Trade Est.

Range Of

Trade Est.

USDA

2017 Final

Corn

 

89.42

87.55-91.00

90.167

Soybeans

 

91.06

89.90-92.60

90.142

Wheat

 

46.30

43.90-47.20

46.012

All Winter

 

32.52

31.50-32.70

32.696

Spring Wheat

 

11.50

10.90-11.92

11.009

Durum Wheat

 

2.38

2.20-2.50

2.307

 

U.S. Quarterly Grain Stocks (billion bu.)

 

USDA
Mar 2018

Average Trade Est.

Range of

Trade Est.

USDA

Mar 2017

Corn

 

8.703

8.550-8.881

8.622

Soybeans

 

2.030

1.810-2.110

1.739

Wheat

 

1.498

1.450-1.640

1.659

 

Several other private firms have also been formulating their estimates for the upcoming growing season.  The private firm, Informa has estimated that the U.S. will plant 88.9 million acres of corn in 2018 which is down from 89.2 million estimated In January.  The firm has estimated 91.5 million acres of soybeans which is up from their January estimate of 91.2 million acres this year. It’s evident from the graph shown below that private firms are looking for more soybean acres this season.  This differs from the USDA that announced at their February Ag Outlook Forum that they expect to see an equal amount, 90 million acres each for both corn and soybeans this season. If the USDA figures are correct that would mean 200,000 less corn acres and 100,000 less soybean acres than last year. 

 

 

Over the past several months ethanol has been the biggest source of price support for the U.S. corn market, specifically ethanol exports. China has not been a buyer of U.S. ethanol which is causing concerns within the industry as exports have now dropped off by almost 50% from earlier months. The even bigger concern for ethanol producers than the declining ethanol exports is the falling demand for distiller’s grain or DDG’s.  Exports of DDG’s are off 4% from last year while production is up by 2.6%.  If we don’t begin to find additional buyers for this product it will be the equivalency of an additional 120 bushels of corn on the U.S. balance sheets.

Last week the Trump administration took action to lessen the $375 billion trade deficit with China.  In retaliation for the tariffs added to Chinese imports China has announced plans to implement at 15% tariff on U.S. steel pipes, fresh fruit and wine, a 25% tariff on pork and recycled aluminum.  The exact tariffs for U.S. agriculture products has not been announced but are likely to come.  Active negotiations are underway between U.S. and Chinese diplomats. The two groups are working to avert a trade war which is offering some optimism to the situation.

Weather in Brazil continues to look very wet over the next two weeks with the exception of Southern Brazil and Rio Grande do Sul which are the only areas expected to be drier than normal.  This could be an issue for corn if the pattern lasts long-term.

 

Scattered rainfall fell over the weekend in Argentina.  The northwestern growing regions received the heaviest showers with light rain across the central portion of the country. The map shown the total precipitation for the area over the past 7 days.

A strong Alaskan ridge is expected to be in control of the weather pattern over the next 2 weeks.  The outlook for the next two weeks looks to be volatile with considerable temperature swings and plenty of rainfall especially for the eastern Corn Belt. 

The extended outlook beyond mid-April shows the blocking ridge will weaken allowing even colder air to descend and lessen the precipitation over a large portion of the Corn Belt.

 

 

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