Mar. 29 – Readying for Today’s Acres and Stocks Report

Grain markets are mostly in the green this morning ahead of today’s reports from the USDA on Plant 2019 acres and their quarterly grain stocks report.

“If you have a positive attitude and constantly strive to give your best effort, eventually you will overcome your immediate problems and find you are ready for greater challenges.” – Pat Riley (NBA player, coach, and executive)

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Grain markets are mostly in the green this morning ahead of today’s reports from the USDA on Plant 2019 acres and their quarterly grain stocks report.

Before digging into those details, Russia’s Grain Union said earlier this week that total production in 2019 could top 2017’s record output of 135.5 MMT if weather remains favourable. [1] Official estimates for Russia’s Harvest 2019 range between 119 – 127 MMT. While it’s certain the more wheat and corn is likely going to be harvested around the world in the 2019/20 crop year, the International Grains Council believes that it will not be enough to satisfy growing demand. [2] As such, the IGC is expecting grain inventories to fall by 29 MMT in 2019, after 2018 is expected to show a 44 MMT reduction.

Switching gears, trade war talks between China and the U.S. have been taking place in Beijing this week. It’s been reported that the Chinese have made some significant compromises on the current forced technology transfer that businesses must comply with to do business in the People’s Republic. [3] The talks this week in Beijing will be followed by another round of face-to-face discussions in Washington next week. Ultimately though, there are still differences on the intellectual property issues, as well as how to enforce any trade deal.

Canola Spat with China Definitively Political

There continues to be a lot of eyes and ears watching canola prices as the tension between China and Canada grows. We know today, however, that the restrictions that China is placing on Canadian canola exports are definitively political. [4]. After Viterra’s license for canola exports to China was suspended earlier in the week, China’s Foreign Ministry spokesperson called the action “scientific” and “reasonable” but then added that Canada should “take practical measures to correct the mistakes it made earlier.”

Most would agree that that “mistake” is the 42-year-old CFO of Huawei sitting on house arrest in her Vancouver house.

Moving away from speculation and towards the facts, Canadian canola exports help up well last week, with nearly 200,000 MT shipped out. Through Week 34, total canola exports for the 2018/19 crop year are sitting at 6.23 MMT, or 8.4% below last year’s pace at this time.

Week 34 Canadian canola exports weekly

Canola prices will surely be watching today’s acreage and stocks report, as the oilseed continues to compete with soybeans for attention. Worth mentioning is that U.S. soybean exports the last few weeks are tracking closer to their 3-year average. That being said, through their Week 29, total shipments have totaled 29.24 MMT (or a little more than 1.074 billion bushels if converting metric tonnes into bushels).

Acres Report US Soybean Exports Weekly Through Week 29

Does Today’s Acres & Stocks Data Even Matter?

Heading into today’s report, grain markets are expecting to see acres for corn at 91.33 million, 86.17 million acres of soybeans, and 46.92 million acres of total wheat. This includes winter wheat acres of 31., which is 1.24 million acres less than a year ago and the smallest area for the fall-seeded cereal in 110 years. It’s widely expected that we’ll see a bigger spring wheat number, climbing by about 5% year-over-year.

Comparably, in its February Ag Outlook Forum, the USDA said that they were expecting Plant 2019 to consist of 92 million acres of corn and 85 million acres of soybeans. For perspective, last year, American farmers planted 89.145 million acres of soybeans and 89.14 million acres of corn.

In Wednesday’s FarmLead Breakfast Brief, I talked a bit about what grain markets are expecting from the USDA in terms of today’s stocks report, namely less corn and more soybeans and wheat. The immediate question that comes to mind now though is how quickly will grain markets brush off today’s numbers since they know they’re not all that factual.

We can probably agree that corn and soybean acres will change by at least a million acres, maybe two, from today’s release since the findings were completed nearly a month ago, and a lot has happened in the last month, namely Mother Nature. There’ll be a lot of springtime fieldwork required across the currently flooded Midwest and what is sure to be a wet, and also parts of the Northern Plains that the NOAA says is likely to flood.

Simply put, there’s a lot of question marks that grain markets will associate with today’s acreage and stocks report. While weather is the biggest factor, the trade war talks between the U.S. and China is certainly another, and thus, Plant 2019 is being questioned from many angles, as I suggested in the FarmLead Breakfast Brief two weeks ago today.

Ultimately, the main question that grain markets will likely be asking after today’s acreage and stocks report is what will 2019’s prevented planted acres total? Prevent plant numbers in the U.S. have been steadily dropping over the last 4 years, from 6.7 million acres in 2015, to 3.4 million in 2016, to 2.6 million in 2017, and then only 1.9 million acres last year. Most analysts are looking for a prevented Plant 2019 area of somewhere between 3 and 4 million acres. Something to certainly ponder over as the USDA gives us the acres and stocks data at 12PM EST today.

Have a great weekend!

To growth,

Brennan Turner
TF: 1-855-332-7653
@FarmLead on Twitter

At 7:45 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3373 
CAD, $1 CAD = $0.7478 USD)

May Corn: -2.8¢ (-0.75%) to $3.745 USD or $5.008 CAD
May Soybeans: -4.3¢ (-0.45%) to $8.965 USD or $11.989 CAD
May Soybean Meal (per short ton): -$1.90 (-0.6%) to $309.10 USD or $413.37 CAD
May Soybean Oil (cents per lbs): +0.01¢ (+0.03%) to 28.66¢ USD or 38.33¢ CAD  
May Oats: +0.3¢ (+0.1%) to $2.733 USD or $3.654 CAD
May Wheat (Chicago): +1¢ (+0.2%) to $4.703 USD or $6.289 CAD
May Wheat (Kansas City): +1.8¢ (+0.4%) to $4.45 USD or $5.951 CAD 

May Wheat (Minneapolis): -1.5¢ (-0.25%) to $5.658 USD or $7.566 CAD
May Canola: +0.9¢ (+0.1%) to $10.253/bu / $452.10/MT CAD or $7.667/bu / $338.06/MT USD

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

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