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Soybean picture complex after USDA report

US corn ending stocks were estimated at 2.127 billion bushels, a decline of 225 million bushels. Corn exports increased 175 million bushels with corn used for ethanol was up 50 million bushels. Last month corn ending stocks were 2.352 billion bushels. Corn usage was up more than expected. US soybean ending stocks were estimated at 555 million bushels, a jump of 25 million bushels. Crush was up 10 million bushels with exports cut 35 million bushels. Last month ending stocks were 530 million bushels. Wheat ending stocks were 1.034 billion bushels and last month it was 1.009 billion bushels.

Soybeans were negative as the US ending stocks increased while traders expected unchanged.

Argentina soybean production was 47 million tons. Last month it was 54 million tons. No surprise for Argentina soybeans. Brazil soybean production was 113 million tons and compares to 112 million tons last month. No surprise for Brazil soybeans. Argentina corn production was    36 million tons with last month at 39 million tons. Brazil corn production was 94.5 million tons while last month was 95 million tons. While the Argentina soybean production was not a surprise, it could be negative as it was larger than earlier private estimates.

Shortly after the report was released corn was up 4 cents, soybeans down 4 cents, and wheat    down 2 cents. Just before the noon release corn was up 1 cent, soybeans were unchanged, with wheat down 3 cents.

Two weeks ago it was a common thread with today’s report for traders as traders anticipated US corn exports or corn used for ethanol to increase while US soybean exports were thought to decrease. Today the soybean picture is more complex and volatile as some expected the US soybean crush could increase due to the smaller production from Argentina.

Weather and USDA are the dominant features in the market this report day. Argentina weather has been THE market feature this past month. As a recap, in a huge surprise to the market, the February 8th USDA Supply and Demand Report raised the US soybean ending stocks 60 million bushels to 530 million bushels. Yet, soybeans closed that day 4 cents higher. Looking further at the price action on that report day, soybeans on the day’s low were down just 5 cents. What erased the negative numbers? Argentina. Weeks later we learn Argentina had their driest February in several decades. Also, it is most apparent that the headline reading algorithms often used by managed money on USDA report days were not in play that February day as the 60 million bushel increase in ending stocks could have easily had soybeans down 10-20 cents in the minutes that followed the report release.

Weather maps today suggest rains could hit Argentina in the north the beginning of next week with better rains over larger areas of Argentina later in the week. Are the rains too late for corn.

Today could also be a hard day to understand price action. With all of the weeks on end news about Argentina, we could easily have Argentina’s corn and soybean production reduced, but prices not move higher. That occurs when trader estimates for production are below what USDA publishes. For example, a friendly number could be neutral or even negative if it is above trade expectations.

Last month USDA estimated Argentina soybean production at 54 million tons. The average trade estimate is for Argentina soybean production is 48.4 million tons. Last week Informa estimated the Argentina soybean production at just 44 million tons. They also estimated Argentina corn production at 33.5 million tons with USDA at 39 million tons last month. The average trade estimate for Argentina’s corn production is 36.6 million tons.

The ramped up rhetoric in Washington, DC on steel tariffs paints an ongoing picture of uncertainty. Today at noon we should hear more details on the tariffs to be imposed. The question is not in those details. Rather, what are the trade retaliations we face from the affected countries? Those retaliatory moves could easily hurt US agriculture and the US economy for months on end.

Three weeks from today USDA will release the March Planting Intentions Report along with the Quarterly Stocks Report. Early projections have corn acres down and soybean acres up from last year. It promises to be a volatile time the balance of March. There used to be a February Intentions Report along with the March Intentions Report. That was cut decades ago due to budget constraints. Now I’m dating myself.

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