By Doug Tenney, Leist Mercantile
The corn number was actually friendly due to feed usage not down as much as some had feared. However, corn exports and corn for ethanol were also reduced.
Typically the April Supply and Demand Report has been pretty boring. Traders view the May report more importantly as it provides the first supply and demand numbers for the upcoming 2019 crops.
Corn ending stocks increased 200 million bushels, due to cuts in ethanol, exports, and corn used for feed.
Traders will be closely watching export projections for corn, soybeans, and wheat and how that flows through to the bottom line. Soybean and wheat ending stocks are expected to see little changes in the U.S. tables. Corn captures plenty of attention to see how USDA views corn fed to livestock and the resulting ending stocks. Last month’s surprise of higher than expected corn stocks had corn closing 17 cents lower.
Just before the report, grains were all lower with corn down 4 cents, soybeans and wheat down 3 cents. Shortly after the report, corn was unchanged, soybeans down 1 cent, with wheat down 3 cents.
The floods in Nebraska and Iowa were not accounted for with the March 29 Planting Intentions Report. Operating loan non renewals by banks are being reported. Plenty of news items other than the U.S. and China trade deal exist. However, the lack of a trade deal has and continues to dominate grain prices.
Today’s report put U.S. corn ending stocks at 2.035 billion bushels, soybeans at 898 million bushels, and wheat at 1.087 billion bushels. Ending stocks in the March report had corn at 1.835 billion bushels, soybeans of 900 million bushels, and wheat at 1.055 billion bushels. Known for months, U.S. soybean and wheat exports year to date have been running below those of a year ago. Corn exports have started to move lower in recent weeks. Also, corn used for ethanol has been struggling. Margins are still negative but margins have improved drastically the past two weeks.
The March 1 trade deadline announced months ago by President Trump has faded well into the background. U.S. and China trade officials continue to hammer out details as headlines report progress, yet details are sorely lacking. A date for a trade signing between the U.S. and China has not been announced. This fact continues to be a negative. Now on the near term radar are further trade talks which also need much attention. Canada is not happy with ethanol, potentially placing tariffs on U.S. ethanol imports. China wants to talk further about DDG shipments. Talks with the European Union also need to take place. Even with a trade deal signing for the U.S. and China taking place someday, it will not move these other trade talks out of focus. The U.S. has expended lots of energy to get a China trade deal completed at the expense of these other trade issues.
World ending stocks of corn, soybeans, and wheat look to increase compared to last month. Corn production in Argentina could increase nearly one million tons with a smaller increase of corn production in Brazil is expected. Brazil’s soybean production is expected to see minor changes lower.
While producer’s minds are on fieldwork and the planting of corn and soybeans, the market seems to care little about all the work producers need to complete in the next six weeks. The Midwest continues to see cool and wet conditions for at least the next 15 days. In the near term, a major snow event looks to be brewing this week. Snow is expected in Nebraska, South Dakota, Minnesota, and parts of Iowa which could be anywhere from 6-22 inches in those areas. Field work delays are expected throughout the Midwest into late April.
Last night’s weekly crop progress report had the U.S. corn planting progress at just 3% with 4% the five-year average. Ohio is beginning to see isolated field work underway as anhydrous ammonia applications have started. If the expected Friday rains would not take place, more field activity is just around the corner. However, soil temperatures remain very cold. Numerous sunny days along with zero rain will need to occur to really get field work taking place in a major fashion.
Weather could move into a market mover if the wet patterns continue across the Midwest.