Grain markets eye USDA production data, exports and weather today
Following USDA’s Thursday release of initial 2018 crop acreage estimates, the agency delivered a fresh round of crop production, supply and demand projections at its 94th annual Agricultural Outlook Conference. With few surprises in these reports, grain markets also turned to the latest export and weather data, making mostly small adjustments to close out the week.
Weather this weekend into next week features a distinctly colder-than-normal western U.S., while the eastern half of the country mostly lands above-normal temperatures. The latest seven-day cumulative precipitation forecast, issued earlier Friday, shows plenty of rain and snow expected east of the Mississippi River through March 2, with much drier weather anticipated further West.
On Wall St., the Dow climbed another 100 points in midmorning trading to 25,113, with strong tech stock performances helping to win back some losses earlier in the week from concerns over rising interest rates. Energy markets also trended higher Friday, except for natural gas, which fell again on warmer U.S. weather forecasts.
Corn prices endured a choppy session after trading in a narrow range overnight, weighing a variety of production, export and weather data. Prices finally closed fractionally lower, with March futures dipping a half-cent to $3.6625, and May futures edged down 0.25 cents to $3.7450.
Corn spot basis bids were steady to firm Friday, with heavy rains causing some transportation delays on the nation’s roadways and rivers. Prices trended 1 to 5 cents higher across multiple Midwestern locations.
Private exporters reported to USDA the sale of 4.5 million bushels of corn for delivery to Egypt during the 2017/18 marketing year, which began September 1.
USDA projects corn production in 2018 will reach 14.930 billion bushels, which is 1% lower compared to last year. That number is based on fractionally lower planted acres, plus a return to trend yields. Because of that, corn supplies could decline from record highs from 2017/18, but they remain relatively large.
If corn yields follow weather-adjusted trends, and assuming a normal growing season, they could reach 174.0 bpa in 2018, down from a record-breaking 176.6 bpa the year prior. Click here for more data and analysis from USDA’s Grains and Oilseeds Outlook, which was released earlier Friday.
Weekly corn export sales for the week ending February 15 reached 61.2 million bushels in old crop sales plus another 2.6 million bushels in new crop sales. That’s down from the prior week’s total of 77.7 million bushels, but above trade estimates of 51.2 million bushels and well ahead of the weekly rate needed to reach USDA’s forecast, now 20.4 million bushels.
Corn export shipments of 33.5 million bushels was 1% lower from a week ago and 2% below the four-week average. Top destinations included South Korea, Peru, Mexico, Japan and Colombia.
A poll of six industry analysts foresee South Africa’s corn harvest to drop 33% from its record-breaking 2017 production to 444.9 million bushels. Lower acreage and drought stress are the primary factors in play.
South Korea purchased another 2.6 million bushels of U.S. corn in a private, non-tender deal on Thursday, for shipment in late May.
Preliminary volume estimates were for 483,380 contracts, down a hair from Thursday’s final count of 485,627.
Soybean prices held off a round of lackluster export data, taking moderate gains in Friday’s session due to some technical buying on continued dry forecasts in Argentina. March and May futures each finished 4.25 cents higher to close at $10.3625 and $10.4750, respectively.
Soybean spot basis bids were wildly mixed Friday, with strained transportation logistics bumping up against increased farmer sales. Reported prices ranged from 9 cents higher to 15 cents lower, based on location.
Private exporters reported to USDA the sale of 1.5 million bushels of soybeans for delivery to unknown destinations during the 2017/18 marketing year, which began September 1. Another 2.4 million bushels to unknown destinations is for set for delivery during 2018/19.
Soybean supplies are projected up 3% from 2017/18, at 4.875 billion bushels. Production could land 2% lower based on “fractionally lower planted area and trend yields,” to 4.320 billion bushels. USDA projects an average soybean yield of 48.5 bpa – just 0. 6 bpa lower than 2017 and 3.5 bpa below 2016’s record-breaking effort.
Soybean export sales for the week ending February 15 only reached 4.2 million bushels, after new crop sales of 8.2 million bushels were partially offset by the cancellation of 4 million bushels in old crop sales, resulting in a marketing year low. Results were well below the prior week’s total of 23.5 million bushels and the average trade guess of 23.5 million bushels.
Soybean export shipments of 32.8 million bushels was also a marketing year low – down 35% from the week prior and 32% below the four-week average. Primary destinations included China, Turkey, Egypt and Mexico.
A Brazilian consultancy has become even more bullish about the country’s 2017/18 soybean production, which it now estimates at a record 4.317 billion bushels, up from prior projections of 4.192 billion bushels in January.
Preliminary volume estimates were for 389,407 contracts, up significantly from Thursday’s final count of 274,699.
Wheat prices finished Friday’s session with mixed results, with technical buying bumping up some prices despite a round of lackluster export sales. March Chicago SRW prices finished a penny higher at $4.5235, but March Kansas City HRW prices fell 2 cents to $4.6875. March MGEX Spring Wheat prices dropped 2.25 cents to $6.0050.
Wheat production for 2018/19 is projected higher than a year ago, by 98 million bushels (a 6% increase). USDA revisions are largely based on the modest increase of wheat acres this year.
Acreage estimates are mixed, with all-wheat acres up 500,000 acres to 46.5 million acres. However, 2018 winter wheat seedings could drop 2%, pushing it to the lowest levels in 109 years.
Weekly wheat export sales found 12.1 million bushels in old crop sales plus another 2.0 million bushels in new crop sales. That bested the prior week’s total of 11.5 million bushels but couldn’t quite match the average trade guess of 15.6 million bushels. The weekly rate needed to reach USDA’s forecast is now 11.2 million bushels.
Wheat export shipments of 15.4 million bushels slumped 15% below the prior week and 10% off the four-week average. Top destinations included Japan, Mexico, Spain, Guatemala and the Philippines.
Indonesia has purchased around 1.5 million bushels of wheat, originating from the Black Sea with 11.5% protein content, for shipment in April.
Preliminary volume estimates were for 132,908 CBOT contracts, a sliver ahead of Thursday’s final count of 132,660.