Market Analysis

The US planting intentions garnered much of the market's attention last week as the USDA’s 2018 corn and soybean survey results were lower than expected. The government won’t utilize this planting data until it issues its first 2018/19 US and World supply/demand outlooks on May 10, but its importance justifies balance sheet creation utilizing Ag Forum trends. The latest quarterly stocks up-dates on March 29—plus our domestic processing and US export sales & shipment reports —are utilized to determine if changes are needed on upcoming US old-crop corn, wheat and soybean balance sheets.

As previously reported, corn’s March 1 stocks were 182 million bu. above expectations. This suggests a possible underestimate of 2017 harvest has occurred. This is handled as a reduction in corn’s feed and residual demand by a likely 100 million decrease to 5.450 billion. This week’s February ethanol corn grind was 434 million bu. bringing this year’s 2^nd quarter demand to 1.397 billion bu. and keeps bio-fuel demand 72 million bu. ahead of last year. With current US export sales 97 million ahead of its 5-year seasonal pace, the USDA should increase this demand by 50-75 million bu. April’s corn carryover may only move up 50 million bu to 2.177 billion. Despite this stock rise, last week’s potential 2 million drop in US plantings could result in a decline of corn stocks to 5-year lows -below 1.7 billion bu. -when using current USDA yield & demand trends.

Wheat’s March stocks seem to confirm its feed demand is on target. With aid & humanitarian exports moving this quarter, this crop’s exports & stocks may be unchanged.

Soybeans’ 77 million bu. higher-stocks-than-the-trade average remains a head scratchier. March’s decline in bean’s residual from 197 million after a hectic export season seems quite logical. Despite Argentine (47 to 41) and Brazilian (113 to 116 mmt) crop changes, no export or stock changes are expected after 25% China import tariff.

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What’s Ahead

The US/China trade war escalated this week when Beijing responded to a US-proposed $50 billion intellectual property tariff with a 25% tariff on US ag imports (soybeans & cotton – primarily), cars and whiskey. China isn’t likely to impose its tariffs until after the 45-60 days it will take to officially get the US tariffs issued. Hopefully, negotiations will prevail and clear this and other trade differences. Hold sales at this time.