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March Supply-Demand Summary

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ATI March Supply-Demand Summary

March 10, 2020

Information provided may include opinions of the author and is subject to disclosures found at the end of this document.

Corn

The USDA left ending stocks at 1.892 billion and with the trade expecting just a 7 mbu reduction, the report was about as exciting as watching paint dry. There were several minor changes on the export front with higher numbers from Ukraine and South Africa largely offset by reduced expectations for Russia and Canada. The average producer price was reduced a nickel to $3.80 and guess we are back to watching spring weather forecasts and debating acreage. And hoping for Balance of the Year exports to average 43 per week. Market action in both corn and soybeans seems to be a recovery from Monday’s sell-off.

Soybeans

The trade was expecting a 15 mbu increase in ending stocks to 440, the USDA opted to go with unchanged at 425 million. South American crops got a bit larger with both Argentina and Brazil increased by 1 MMT to 54.0 and 126.0, respectively. The 3-country production total (including Paraguay) is now up 8.75 MMT from last year’s out-turn. No changes were made to the Chinese balance sheet with crush holding at 86.0 and imports at 88.0. The point estimate for U.S. producer prices was trimmed back a nickel to $8.70, perhaps in spite of global carry-out rising by 3 ½ MMT from the February forecast. We are still intrigued by the need to make nearly 600 mbu in new sales to reach the export forecast, particularly given the size of the South American crop; the previous balance of the year high was something on the order of 340 million.

Wheat

Mostly neutral, although competitor exports from Russia and Argentina were increased by 1.0 MMT and 0.5 MMT, respectively. Concern about excessive moisture across the vast majority of U.S. SRW has underpinned Chicago SRW futures, while moisture conditions for most U.S. HRW areas are adequate. Prospects for the 2020 crops in the Black Sea region and the EU appear to be generally favorable as spring approaches. Choppy trading likely to continue near-term.

Market Trend

Pre-Report At Release Current (12:00)

Corn

+4 1/2 +3 +4

Soybeans

+9 3/4 +8 +8-9

Wheat

+2 1/2; +2 1/4+ -1 1/4 +1 1/2; +1/4; +1 1/2 -2; +1/4; -2 1/4

U.S. Carry-Out

Feb 18/19 USDA Mar 18/19 USDA Feb 19/20 USDA Mar 19/20 Trade Mar 19/20 USDA

Soybeans

909 909 425 440 (410-586) 425

Corn

2,221 2,221 1,892 1,885 (1,767-1,967) 1,892

Wheat

1,080 1,080 940 943 (910-999) 940

Milo

64 64 40 NA 35

Cotton

4.85 4.85 5.40 NA 5.10

South America Production (MMT)

Feb 18/19 USDA Mar 18/19 USDA Feb 19/20 USDA Mar 19/20 Trade Mar 19/20 USDA

Soybeans

Argentina

55.3 55.3 53.0 53.4 (53.0-54.2) 54.0

Brazil

117.0 117.0 125.0 125.0 (124.2-125.5) 126.0

Brazil CONAB

115.0 115.0 123.25 124.7 (123.1-128.0) 124.2

Paraguay

8.85 8.85 9.90 NA 9.9

Corn

Argentina

51.0 51.0 50.0 (49.0-53.5) 50

Brazil

101.0 101.0 101.0 100.9 (99.5-101.5) 101

Brazil CONAB

100.0 100.0 100.1 101.3 (98.5-104.8) 100.1

South Africa

11.80 11.82 14.5 NA 16.0

World Ending Stocks (MMT)

Feb 18/19 USDA Mar 18/19 USDA Feb 19/20 USDA Mar 19/20 Trade Mar 19/20 USDA

Corn

320.5 320.8 296.8 297.3 (294.9-299.5) 297.3

Soybeans

111.2 111.9 98.9 99.3 (97.8-101.0) 102.4

Wheat

278.3 277.6 288.0 288.5 (286.3-291.0) 287.1

Corn

  • A non-event;
  • Corn carry-out unchanged at 1.892 bbu;
  • No change in feed/residual; FSI; nor exports;
  • The average producer price forecast however, was lowered $.05 to $3.80 per bushel.

Sorghum

  • Carry-out reduced by 5 to 35 mbu;
  • Feed/residual use was lowered 10 mbu to 130;
  • Exports were bumped 15 million higher to 135 (China);
  • Expected producer price was reduced by $.05 to $3.30 per bushel.

Soybeans

  • Carry-out out continues at 425;
  • Accordingly, no changes on the demand side with exports continuing at 1.825 bbu and crush at 2.105 billion;
  • Average producer price lowered $.05 to $8.70.
  • SBO
    • Production unchanged at 24.290 billion pounds;
    • SBO exports increased by 200 mil lbs to 2.1 billion;
    • Domestic use (biodiesel) reduced by 200 million pounds (22.9 billion and 800 million);
    • Endings stocks remain at 1.515 billion;
    • But average price of Decatur crude SBO lowered $.02 per pound to $.3150.
  • SBM
    • No changes—exports, domestic use and average price of 48% all unchanged from last month.

WHEAT

U.S. All Wheat Supply/Demand—19/20

  • Feed/residual usage is unchanged at 150 mbu;
  • Exports were steady at 1.0 bbu;
  • Carryout for 19/20 pegged at 940 mbu vs. the average trade guess of 943;
  • Avg. farm price forecast range pegged at $4.55, which is unchanged from February; stocks-to-use at 43.4%, which is unchanged from February but down from 53.0% last year

U.S. Supply/Demand by Class—19/20

  • Hard Red Winter
    • Domestic use unchanged at 480 mbu;
    • Exports forecast at 390 mbu, which is steady compared to February;
    • Carryout for 19/20 pegged at 484 mbu vs. 484 last month and 516 for 18/19;
    • Stocks-to-use for 19/20 pegged at 55.6% vs. 55.6 in February and 70.5% for 18/19
  • Soft Red Winter
    • Domestic use unchanged at 196 mbu;
    • Exports forecast steady at 100 mbu vs. 128 last year;
    • Ending stocks for 19/20 unchanged vs. January at 106 mbu and 158 for 18/19;
    • Stocks-to-use for 19/20 pegged at 35.8%, unch vs. January and 46.9% for 18/19
  • Hard Red Spring
    • Domestic use unchanged at 311 mbu;
    • Exports forecast at 275 mbu, up 15 mbu vs. February but above 259 last year;
    • Carryout for 19/20 at 249 mbu, down 15 mbu from January and v. 263 in 18/19;
    • Stocks-to-use for 19/20 pegged at 42.5% vs. 42.5% in February & 45.1% in 18/19

WORLD

Coarse Grains/Corn

  • Beginning global coarse grain stocks are unchanged from LM at 348.0 MMT:
  • Ending stocks raised 700 K to 327.3 MMT;
  • Beginning global corn stocks edged up 340 K to 320.8; ending stocks, ½ MMT higher at 297.3;
  • No change in South Am production estimates: Argentina, 50.0; Brazil, 101.0 but the USDA did raise South Africa by 1.5 MMT to 16.0 (11.8 LY);
  • No changes for China, imports still at 7 MMT and feed use at 190. No word on China ag-attache who reduced feed/residual use to 175, versus WASDE’s 190 MMT figure;
  • Exports were raised by ½ MMT for South Africa to 2.5 MMT; Ukraine’s are upped by 1 to 32.0 (30.3 LY); EU up 100 K to 2.9 (3.6 LY); no change to Argentina (33.5 TY, 37.0 LY) nor to Brazil (36.0 TY, 39.75 LY); Russian shipments were cut back 1 MMT to 4.7 (2.8 LY) and Canada’s by 400 K MT;
  • Noted that foreign wheat feeding was slightly reduced (100 K MT) to 143.8 and is now up 6.4 MMTY versus LY;
  • The import side had SE Asia’s down 200 K to 17.7 MMT and Canada’s raised ½ MMT to 1.5 (2.6 LY)

Soybeans/Meal

  • Production estimates for both Argentina and Brazil increased by 1 MMT to 53.0 (55.3 LY) and 126.0 (117.0), respectively
  • No changes in S AM exports with Argentina continuing at 8.2 (9.1 LY) and Brazil at 77.0 (74.6 LY);
  • Chinese crush continues to be estimated at 86.0 (85.0 LY) and imports at 88.0 (82.5 LY);
  • Argentina meal exports reduced 850 K to 30.0;
  • EU SBM imports down 300 K to 18.7;
  • Non-Chinese SBM use revised 550 K lower to 169.5, and now up 5.8 MMT year to year.
  • Global bean reserves boosted 3.6 MMT (mostly South America) to 102.4 MMT.

Wheat

  • World production for 19/20 pegged at record 764.5, up fractionally vs. February;
  • Australia production down 0.4 MMT to 15.2; exports down 0.2 MMT to 8.0 MMT;
  • EU crop steady at 154.0 MMT; exports unchanged at 32.0;
  • Russia production up 0.110 MMT at 73.6 MMT; exports up 1.0 MMT to 35.0 MMT;
  • Ukraine production steady at 29.0 MMT; exports unchanged at 20.5;
  • Canada crop unch at 32.4 MMT; however, exports lowered 0.5 MMT to 23.0;
  • Argentina production up 0.5 MMT to 19.5 MMT; exports up 0.5 MMT to 13.5 MMT;
  • World ending stocks for 19/20 forecast at 287.1 MMT vs. 288.0 in February.
  • Ending stock-to-use ratio for 19/20 is projected at 38.0% vs. 38.2 last month.

The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.

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