Update for April 4th, 2018

China’s Ministry of Commerce announced today plans to impose a 25% tariff on U.S. soybeans and several additional agricultural produce including corn, wheat, cotton sorghum, tobacco and beef in addition it’s expected that ethanol will see a 15% tariff.  This comes as retaliation against U.S. proposed duties on high-tech goods from China.  The actual date that these tariffs will be implemented depends on the outcome of negotiations being held between our two countries.

Last Thursday the USDA surprised the market with lower than expected acreage estimates for both corn and soybeans. Corn acres were estimated at 88.026 million vs the trade estimate of 89.42, this is a 2% decline from 2017. Soybean acres were estimated at 88.982 vs the trade estimate of 91.06, this is a 1% decline from 2017.  This reduces total corn and soybean acres by 3.301 million acres compared to last year.  Wheat acres came in higher than expected at 47.399 million compared to 46.0 with spring wheat leading the way with 12.627 million acres vs the expected 11.5 million acres, for spring wheat that is a 15% increase from a year ago when looking at the total for wheat as a whole there is a 3% increase from last year.  Other crops pulling significant acres away from corn and soybeans besides wheat are cotton, up 7% from last year, sorghum, rice and oats. The map below shows the reduction of corn and soybean acres is widespread across the Plains and Corn Belt.

 

 

USDA Planting Intentions & Quarterly Grain Stocks

USDA March Acreage (million acres)   USDA March 2018 Average Trade Est. Range of Trade Est. USDA 2017 Final Corn 88.026 89.42 87.55-91.00 90.167 Soybeans 88.982 91.06 89.90-92.60 90.142 Wheat 47.339 46.30 43.90-47.20 46.012 All Winter 32.708 32.52 31.50-32.70 32.696 Spring Wheat 12.627 11.50 10.90-11.92 11.009 Durum Wheat 2.004 2.38 2.20-2.50 2.307 Cotton 13.469 13.29 13.00-13.60 12.612

 

U.S. Quarterly Grain Stocks (billion bu.)   USDA March 2018 Average Trade Est. Range of Trade Est. USDA March 2017 Corn 8.888 8.703 8.550-8.881 8.622 Soybeans 2.107 2.030 1.810-2.110 1.739 Wheat 1.494 1.498 1.450-1.640 1.659

 

 

Based on the USDA estimated acreage levels, if everything else were to remain unchanged, new crop ending stocks would fall.  It’s projected that ending stocks for corn would decline by around 400 million bushels and soybeans by approximately 115 million bushels from 2017. It’s important to remember though that these March intentions numbers typically increase in the June revised report.

When looking at the stocks data that was given in the report, the U.S. held 266 million more corn bushels than a year ago and 368 million more soybeans.  The corn reserve is spread out quite evenly across the U.S. while the largest amount of soybean stocks are found in Iowa, Illinois and Minnesota.

Michael Cordonnier, a South American grain expert is continuing to reduce his estimates for the Argentine corn and soybean crops while leaving Brazil estimates unchanged.  This chart shows his crop ratings for Argentine crop conditions.

 

 

Other sources find similar outcomes from Argentina with some estimates below 40 million metric ton. These sources differ in expectations in Brazil production level though, they estimate the production in Brazil is now close to 120 million metric ton. As long as the total production out of Argentina and Brazil remains above 159 million metric ton there will be little impact on global balance sheets.

Spring is very slow to arrive across much of the eastern portion of the U.S.  Unfortunately WeatherTrends 360 expects 4-5 bigger storms to cross the country over the next 10 days bringing more snow and severe weather.

 

 

As you can see from the NOAA maps below there is a consensus among forecasters that the month of April looks to be wetter and colder for many of us this year.