Corn: The consensus among analysts is USDA will raise old crop stocks tomorrow morning. However, there is a disagreement about where exactly they will adjust demand. Most of the group will point to corn exports. Though recent weeks have been close to a normal pace, it will be hard to make up for months of far below normal exports.
Soybeans: The trade is preparing for bullish news on tomorrow’s report. Old crop stocks could drop around 20 million bushels or so. While the domestic crush rate is weak, it could be overshadowed by a jump in exports out of USDA. The phenomenal purchases from China have raised the bar of expected exports. However being realistic, we all know China will drop off at some point. Today they purchased another 120,000 tonnes of U.S. soybeans (4.4 million bushels). We may have a few more days before they completely abandon us.
Wheat: The trade is expecting USDA to make few changes on its wheat balance sheet. There are valid bullish arguments to made regarding the drought in the United States’ southern plains. However, the trade will not get too excited until spring dormancy starts. Additionally forecasters are throwing a few rains (today included) into the plains in the next week or so. On Thursday China called a drought emergency in northern areas. They clarified this may not impact their wheat ground much if farmers irrigate as they have been told. Additionally, the government made it clear its 60 mmt in government reserves would offset any shortfall.
Rich Nelson is the Director of Research at Allendale Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.
