Corn, soybeans, wheat digest stocks and acreage report

April 1, 2014 02:01 AM
Grain & Oilseeds

Corn: Surprisingly, the stocks and acreage report numbers were slightly bullish, which didn’t require a violent move in the corn market. Trade was looking for corn stocks to come in at 7.099 billion bushels with Monday's actual stocks number showing 7.006 billion, 93 million less than trade had expected. For acreage, trade was looking for 92.748 million acres with Monday's actual number showing 91.7 million, 1.048 million fewer acres than expected. Both numbers will lend support to corn with neither suggesting a major rally on its own.

All focus should now shift to the early planting forecast. As of Monday at noon, the one- to 10-day outlook calls for slightly below normal temps with a large scale warm up expected in the 11- to 15-day outlook. Trade will be watching the updates to these maps daily, which could provide the best short term trading guidance in this market.

Short-term traders might want to wait a day or so to find where new support/resistance is but should expect both to be slightly higher than the levels used going into the report. Longer-term outlooks continue to suggest solid weather, which is bearish but should allow the short-term issues adding support to play out before becoming active sellers…Ryan Ettner

Soybeans: Monday’s USDA report was considered bearish against the trade's expectations. The knee-jerk reaction of the market was bearish and the market sold off. The bulls then managed to gain their footing and pushed the market to new highs for the move.

Soybeans stocks as of March 1 were estimated at 992 million bushels. The USDA found we have just a little less grain on hand than last year at this time. This was very close to the average trade guess of 989 (ALDL 981) and was considered neutral. Exports and domestic crush are already known ahead of time, so this report number is generally not a market mover for soybeans. As it stands, we are on target for another year of tight ending stocks.

As for the prospective plantings part of the report, it was bearish. Pretty much everyone was looking for soybean acreage to be up big time this year, the only question being how big of an increase will we see. The USDA estimated bean acres at 81.493. That was just over the 81.075 average guess (ALDL 83.212). If this acreage estimate is correct, we anticipate that new-crop ending stocks will push to a bearish 350-400 million bushels level using trend yields. If planting eventually comes in much larger, as we contend, you are talking ending stock levels jumping to the 450 million bushel level. With the USDA still not accounting for a bulk of the7.3 million acres that were prevented planted last year, we look for those acres to show up in the June 30 report.

Now that this report is out of the way, the trade’s attention will shift to spring weather. A cool wet spring could shift some acres to beans, but it is way too early to take talk about acreage shifts seriously but that won’t keep some form talking about it. Traders also need to keep an eye out for conformation of exports sales cancellations as well sales of beans into the United States. We need both to happen to keep ending stocks from dropping below pipe line levels...Jim McCormick 

Wheat: Wheat finished the day slightly higher after the USDA released a slightly bearish quarterly grain stocks number Monday. The average trade guess was for 1.042 billion bushels and the USDA released 1.055 billion bushels. The trend continues to be higher for wheat. With some possible chances of rains moving through the plains over the next seven days keeping a lid on things, we continue to look for reason to attempt to take out the recent highs.

The rejection of lower trade Monday needs to be followed with some trade above into new highs to continue to upward momentum we have felt, and if we can’t see trade move into new highs, we have to assume we are going to sit in this sideways pattern at least shorter term.

The Ukraine situation was on the back burner Monday as we haven’t heard much about the continued escalation, but we also haven’t heard about any resolution in the near future.

Continue to trade the trend in this market, which does appear to be higher, but watch for weather development in the plains as moisture will do a good job of pushing this market lower if we can see some rain events in April the key time for this crop.

About the Author

Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is Senior Broker/Manager at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA.