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Top 3 watch list items for grain trade this month

Tracking these items offer clues on when price lows or highs might be near, allowing you to make better grain marketing decisions.

1.  Two key USDA report dates this month

The USDA WASDE report will be released on Tuesday, March 10. Traditionally, there is little change in the supply category for this report. The USDA will likely not change planted or harvested acres on this report, nor will they adjust yield. The current U.S. supply of grain will likely mirror the February report: 2019/20 U.S. soybean production is currently pegged at 3.558 billion bushels. 2019/20 U.S. corn production is 13.692 billion bushels, and 2019/20 U.S. all wheat production is at 1.92 billion bushels. When looking at global grain production, the USDA will likely keep current estimates unchanged as well.

I honestly doubt if demand will be changed that much on the March 10 report either.  The February report showed many changes; demand increase for corn used for ethanol, food, seed and industrial. That report also showed demand decreases for corn exports. The February report showed demand increase for soybeans for export, which is the reason that ending stocks were reduced so much last month. Because large adjustments were made in February, it seems unlikely that the March report will show much change.

On March 31 the USDA will release two important reports. The first is the Prospective Plantings report.  Honestly, “Meh.”

At the February USDA outlook forum, the USDA announced their early expectations for what farmers will plant in spring, and the USDA rarely strays too far from those numbers for the Prospective Planting report.  At the February Outlook Forum, they suggested U.S. farmers will plant 94 million acres of corn, 85 million acres of soybeans, and 45 million acres of wheat in the spring. Look for more of the same on the March 31 report. 

What I AM excited for is the quarterly stocks report also released on March 31. This report will show an update on how much grain was used during the first quarter of 2020. It reflects grain in storage on farm and off farm, and how quickly we are using grain overall.  This may also start to reflect the low test weight on corn.

2. Weekly export reports

Exports are important as we continue to monitor global demand for our grains. Recently the sorghum market stole the spotlight in terms of exports, but we need to also see continuous weekly demand for corn, beans, and wheat. We need to make sure that our existing customers continue to buy our product, as well as look for any glimmers of larger exports to China. China has not yet stepped up to the plate in terms of what they said they would purchase from the United States as spelled out in the Phase 1 deal.  And the USDA has said they will not start to add that potential Chinese export demand onto USDA reports until the May 2020 report at the earliest. So we need to gauge each weekly report to see if China is actually buying or not. 

And remember, the market has not yet priced in the additional potential Chinese demand.

3. Funds

The big money in the market has gone short (sold futures contracts) in corn, soybeans, and wheat. Funds have a tendency to follow seasonal price patterns and USDA report data. What we want to pay attention to now is how short they go, meaning how many contracts will they continue to sell? Will they keep the sell pressure on and for how long?

Right now in soybeans, funds are short approximately 80,000 contracts. Just last year in early May they were short just over 160,000 contracts. So, if fresh news does not emerge soon, prices just might continue to slide lower as funds keep the selling pressure intact. 

For corn the funds are currently short approximately 90,000 contracts. Last year, the funds went short over 300,000 contracts of corn by late April (Gulp!) So it is just important to be aware of the positions they have, and historically what they have done in the past, and how that compares with seasonal price tendencies in the market place.

Tracking all of these items will help with knowing when a price low or high might be near, ultimately allowing you to make better grain marketing decisions.

Reach Naomi Blohm: 800-334-9779 and naomi@totalfarmmarketing.com
Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation
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