USDA Worksheet, Status on Trade Deals and Weather Outlook - Friday, 13 April 2018

Update for April 13, 2018

 

While somewhat surprising, the markets are focusing little attention on the trade war instead prices seem to be more interested in U.S. spring planting delays, the declining condition of winter and spring wheat and smaller than expected South American corn production. 

The USDA announced the April Supply and Demand report on Tuesday which delivered some surprises. 

  • U.S. soybean ending stocks were lowered by 5 million bushels from a month ago to 550 million bushels.  This blew away estimates from the trade which showed an expected 19 million increase in stocks. 
  • Global soybean supplies were reported at 90.80 million tons vs 94.40 a month ago and trade estimates of 92.95 million tons.  This reduction is partially due to further cuts to Argentine production which dropped another 7 million tons from last month.
  • U.S. corn ending stocks grew by 55 million bushels from a month ago but was slightly less than the trade was looking for. 
  • Global corn stocks fell by 1.39 million tons to 197.78.  Yield reductions to both Argentina corn, down 3 million ton and Brazil corn, down 2.5 million tons was the main reason the global corn supply was lowered.

 

2017-18 USDA U.S. Grain Carryout (billon bu.)

 

USDA April

2017-18

Average Trade Est.

Range of

Trade Est.

USDA Mar

2017-18

Corn

2.182

2.189

2.067-2.265

2.127

Soybeans

0.550

0.574

0.545-0.625

0.555

Wheat

1.064

1.036

0.989-1.060

1.034

 

 

2017-18 USDA World Grain Carryout (million tons)

 

USDA April

2017-18

Average Trade Est.

Range of

Trade Est.

USDA Mar

2017-18

Corn

197.78

197.29

191.50-202.00

199.17

Soybeans

90.80

92.95

91.00-96.00

94.40

Wheat

271.22

268.16

266.50-270.00

268.89

 

 

2017-18 South American Production (million tons)

 

USDA April
2017-18

Average Trade Est.

Range of

Trade Est.

USDA Mar

2017-18

ARG Corn

33.00

33.74

32.00-36.00

36.00

ARG Soy

40.00

42.66

40.50-46.00

47.00

BRZ Corn

92.00

92.71

86.50-96.00

94.50

BRZ Soy

115.00

115.25

113.30-117.00

113.00

 

 

 

 

 

 

 

 

Very little planting is expected to be done in northern regions of the Corn Belt this month.  We would assume that this delay would be bullish to prices but at this early stage the delays are actually considered to be bearish to the market.  The reason for this is the fear that we could now see fringe acres that were slated to be planted to spring wheat may actually switch to soybeans.  If this unseasonable weather continues in the heart of the Corn Belt we could also see corn acres move to soybeans as well. This is concerning to the market because it is unclear what would these added soybean acres do to the balance sheets and how high ending stocks could be pushed as a result.  Higher than expected yields are being reported in Brazil and Paraguay.  Paraguay soybean yields are estimated to be at or near the record yields from a year ago, these bushels go a long way towards off-setting the losses in the Argentine soybean production.  News from Brazil that producers plan to expand winter crops due to improved weather conditions and more profitability is also weighing on market prices in the U.S.

President Trump has told his top economic advisors to look into the possibility of re-entering the TPP (Trans-Pacific Partnership) which he pulled the U.S. out of when he first took office.  This comes as several senators from agricultural states met with the President yesterday to discuss concerns about proposed tariffs on China and the harm it will cause across all of agriculture. The President also raised the E-15 issue and has commented that he is in favor of the use of year-round E-15. This would mean the administration is finally ready to revisit the RVP waiver which would allow E-15 to be sold year-round and nationwide without any conditions.

 

There is increasing optimism in Washington as senior ministers from the three NAFTA countries meet again to find common ground.  U.S. Trade Rep, Robert Lighthizer is meeting today to continue high-level trilateral negotiations that “have warmed considerably, raising hopes of some kind of agreement in principle soon despite warnings that key gaps remain.” President Donald Trump stated, “We’re working very hard on NAFTA with Mexico and Canada.  We’ll have something, I think, fairly soon” he also added that he has instructed his staff to “take it nice and easy, there’s no rush.” Canadian Prime Minister, Justin Trudeau also announced that talks, “are moving forward in a significant way.”  It’s unclear how much progress has been made with the agreement but the optimism shown by those involved is promising.  White House official have suggested that there is a possibility that we can reach a resolution with China over trade disputes and signs the President is looking to make a deal on NAFTA as well are all good news to agriculture.

 

Through all of this uncertainty the President has vowed to protect U.S. farmers.  Section 301 of the U.S. Trade Act of 1974 gives the president the authority to take appropriate action.  This includes retaliation to stop policies or acts by a foreign government that violate international trade agreements or unfairly restricts U.S. commerce. President Trump said that, “I have also instructed the Secretary of Agriculture, with the support of other members of my cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests.”

The Trump administration has mentioned the possibility of direct payments through the Commodity Credit Corporation Charter Act as a way to achieve this.  This act authorizes sales of agricultural commodities to other government agencies and to foreign governments and the donation of food to domestic, foreign or international relief agencies.  The CCC has the authority to borrow up to $30 billion from the U.S. Treasury at any one time and can be used to fund various statutes as well as the Farm Bill. Obviously producers prefer to make their money on the market but it’s reassuring to know a safety net is being designed just in case.

The jet stream has begun to plunge south delivering below normal temps across the Midwest.  This abrupt shift has triggered a low-pressure system which is expected to bring blizzard conditions to the Plains and Upper Midwest this weekend. Cool Arctic air is expected to make its way as far south to the Delta Region.

 

 

The 3 coldest spots on Earth this week and next will be Central Siberia, the North Pole and the Eastern half of the United States!! WeatherTrends 360 predicts a stormy pattern for the northern half of the country and hard freezes into the Deep South from Texas to Georgia.

 

© 2015 Ag Performance | All Rights Reserved.

Home | About Us | Products | News | Contact Us |