Wednesday, April 1, 2015
The following are the highlights from the USDA March 1 Quarterly Grain Stocks and 2015 Planting Intentions Reports:
U.S. Grain Stocks (March 1) Planting Acreage Estimate
Corn: 7.745 billion bu. 89.2 million acres
Soybeans: 1.334 billion bu. 84.6 million acres
Wheat: 1.124 billion bu. 55.4 million acres
U.S. producers are expected to plant a record amount of Soybeans this season according to the USDA. In the usually highly anticipated Prospective Plantings report that was released on Tuesday, the USDA estimated U.S. Soybean plantings at 84.635 million acres which was above the 83.701 acres planted last year. However, New-crop Soybean prices actually rallied following the report as traders were expecting an even larger amount of acreage for Soybeans this season. Old-crop Soybean inventories as of March 1 were 1.334 billion bushels, up sharply from 2014 when inventories stood at 994 million bushels. However, analysts were expecting even larger supplies of Soybeans in the bins, which allowed the May contract to rally sharply off session lows. The report triggered sharp intra-day price volatility with both the May and November contracts, trading in an over 30-cent price range in the minutes following the data release. Spread traders saw the old-crop/new-crop Soybean spread widen slightly with the old-crop May futures trading slightly above a 20-cent premium to the new-crop November futures as of this writing vs. a 19-cent May premium on Monday.
Looking at the daily chart for November Soybeans we notice the large price swing that occurred on Tuesday, following the release of the USDA Prospective Planting report. In particular we should note that prices did attempt a test of the 20-day moving average on Tuesday, but prices ended up closing below this key technical indicator on Tuesday. The 14-day RSI has turned upward, but is still reading a rather weak 43.99. The next major resistance level is seen at the March 2 high of 1004.75, with support found at the September 29 low at 927.50.
Mike Zarembski, Senior Commodity Analyst