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09

February USDA Supply & Demand

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In soybeans, the USDA supply/demand report left U.S. ending stocks unchanged compared to expectations for a small reduction tied to higher exports.  World ending stocks 80.38 million tons vs the estimate of 81.2 million tons.  Brazilian bean production was unchanged at 104 million tons, close to pre-report expectations in a February report where changes are typically small.  Argentine bean production was reduced 1.5 million tons to 55.5 million tons vs a 54.5 million ton pre-report guess. 

Overall the report should be viewed as slightly bearish as U.S. exports were left unchanged with expectations by economists Brazil will take a large portion of summer demand to China.  combined with a larger CONAB bean estimate this morning, the primary driver in bean prices seems to be a reluctant Brazilian and U.S. farm seller.

Corn - In today's USDA report, corn supply/demand should be seen as friendly compared to trade expectations as ending stocks declined 35 million bushels on higher ethanol and industrial demand.  World ending stocks came in at 217.6 million tons vs an estimate of 220.5.  Stocks are down 3.4 million tons from January's report.

Brazilian corn production was estimated at 86.5 million tons vs an estimate of 87.1 million tons. Argentina corn was unchanged at 36.5 million tons.  World corn stocks came in about 3 million tons below the average trade guess on higher Chinese feed use leaving the positive tone to current charts unchanged.

Wheat -  The USDA report should be taken as friendly as ending stocks were trimmed 50 million bushels, pushing ending stocks to 1.139 Billion bushels.  The trade was looking for something in the 1.176 range.  Exports was the main driver in the USDA's reduction to U.S. stocks.

World wheat ending stocks were estimated at 248.6 million tons, down 4.5 million tons from the pre-report estimate. The specs still hold a large 100,000 contract net short position leaving a short covering rally set up if prices can trade over current major resistance at $4.58 on the March soft wheat.  

 

2016-17 USDA U.S. Grain Carryout (bln bu)
 
USDA
Feb 2016-17
Average Trade Est.
Range of
Trade Est.
USDA
Jan 2016-17
Corn
2.320
2.335
2.280-2.415
2.355
Soybeans
0.420
0.410
0.386-0.448
0.420
Wheat
1.139
1.180
1.145-1.211
1.186
 
2016-17 USDA World Grain Carryout (million tons)
 
USDA
Feb 2016-17
Average Trade Est.
Range of
Trade Est.
USDA
Jan 2015-16
Corn
217.56
220.43
218.00-225.10
222.98
Soybeans
80.38
80.93
78.90-82.50
82.32
Wheat
248.61
253.13
242.00-254.70
253.29

2016-17 South American Production (million tons)
 
USDA
Feb 2016-17
Average Trade Est.
Range of
Trade Est.
USDA
Jan 2015-16
ARG Corn
36.50
35.78
34.00-36.50
36.50
ARG Soy
55.50
54.54
52.20-56.00
57.00
BRZ Corn
86.50
87.05
82.20-91.50
86.50
BRZ Soy
104.00
104.08
103.25-105.00
104.00
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These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. This commentary is written as a daily marketing tool to help farmers sell the grain they raise. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Past performance and testimonials are not necessarily indicative of future results. Commodity trading involves the risk of loss, and you should fully understand those risks before trading.