USDA Data Suggests Tight Bean, Wheat Stocks
Soybeans – Soybeans are expected to trade 15-20 cents higher on what is generally seen as a supportive USDA Supply and Demand report. The U.S. carryout figure for Beans was 140 million bushels, down from the February report suggesting a 160 million bushel carryout. The figure was at the lower end of expectations, confirming very tight supplies of the oilseed. Tempering the U.S. data, however, was world carryout, which was seen at 47.44 million metric tons, up from the February reading of 45.82, mainly due to increased South American production.
Wheat – Wheat is seen opening 20-25 cents higher on further declines in U.S. stocks. U.S. carryout is pegged at 242 million bushels, falling 30 million bushels from the February report. World carryover has been revised up to 110.4 million metric tons from the prior estimate of 109.7, but this small upward revision does not change the fundamental outlook of the old crop Wheat. The tight stocks may result in even more government intervention overseas, resulting in higher acreage for the new crop year. China has already increased allocations of land for farming the grain.
Corn – The Corn report was seen as neutral to bearish, but the market may find some outside support from Beans and Wheat to open higher. Today’s U.S. carryout estimate of 1.438 billion bushels was unchanged from the February report and higher than the consensus estimate of 1.435 billion bushels. World carryover was revised up to 104.0 million metric tons from last month’s 101.9 million metric ton figure. The report shows that unlike Beans and Wheat, the Corn market is adequately supplied due to high acreage even though demand has been solid.
Overall, the report confirmed the market’s suspicions that Bean and Wheat stocks will remain tight. The supportive prices of these grains may result in higher acreage for the new crop year at the expense of Corn and Cotton, respectively. Much of the drawdown in U.S. stocks was a result of robust global demand rather than pressured supplies, save for certain grades of Wheat. If export demand begins to cool, we may see a restocking of U.S. supplies. This is highly unlikely at this point due to the weak Dollar making the U.S. the global supplier of grain. Traders will soon begin to shift their focus toward planting intentions for the new crop year, and it will be interesting to see how this year’s battle for acreage will play out, both in the U.S. and globally.
Rob Kurzatkowski, Commodity Analyst
