Grain prices this morning are mostly in the green as the complex awaits the March WASDE report with the hope that it can stop the bleeding.
“Any fact that needs to be disclosed should be put out now or as quickly as possible, because otherwise the bleeding will not end.” – Henry Kissinger (former US Secretary of State)
Mar. 8 – Can the March WASDE Report Stop the Bleeding?
Grain prices this morning are mostly in the green as the complex awaits the March WASDE report with the hope that it can stop the bleeding we’ve seen this week. While U.S. export sales were generally strong yesterday, this week’s sell-off continued, especially for wheat and corn prices: In Chicago, SRW wheat prices fell more than 11¢/bushel while corn was down 7¢. Ultimately, it seems that this sell-off has been accompanied by a build up in a short position ahead of Plant 2019.
The Influence of China on Grain Markets
Canola prices this morning are trying to find some legs after the last 9 trading sessions have pushed the Canadian oilseed lower by about $25 CAD/MT. As mentioned in Monday’s FarmLead Breakfast Brief, canola prices have been negatively impacted by China, namely, their feedstuff needs dropping and politics surrounding the detention of Hauwei CFO, Meng Wanzhou. On the latter, we saw Richardson International lose its approval to ship canola to China, which is seemingly more and more political than it is about the “hazardous pests” that the Chinese claimed to have found in their boats. 
On that note, Canadian canola exports are still tracking more than 6% behind last year’s pace with 5.8 MMT shipped out thus far through Week 31 of the 2018/10 crop year.
There are some rumours this morning that trade negotiators still haven’t been able to firm up the enforcement of a trade deal that appears to be generally on the same page (in principle at least).  This basically means that there won’t be a trade deal announced today but who knows for next week.
Ultimately, the market seems to be seeing through all the talk and is only going to respond to something concrete. With this unknown known, the sidelines seem the best place to play. That being said, the market is getting a little more faith in China in terms of buying American soybeans as it was confirmed that they bought at least 500,000 MT yesterday.
Stepping that up though, there are some birdies flying around saying that China will buy 2 MMT of US soybeans.  It’s not clear if this is in addition to the 500,000 MT bought yesterday or the 10 MMT of soybeans that China said they’d buy back on February 22nd. In fact, in last week’s sales and exports data, we saw some big numbers from the USDA in terms of actual shipments (as the chart below alludes to). This past week of actual soybean exports wasn’t as robust. Maybe next week?
March WASDE Pre-Report Guesstimates
Going into this month’s March WASDE report, the expectation from the market is that U.S. ending stocks won’t change all that much. Average WASDE report guesstimates suggest that 2018/19 ending stocks for U.S. corn will bump up a little bit to 1.736 billion bushels.
There are expectations that the March WASDE will show a reduction in ethanol demand but even then, I would think that the strong pace of export demand would offset this. Through Week 26 of the 2018/19 crop year, US corn exports are tracking nearly 40% higher year-over-year with 26.3 MMT shipped out (or 1.035 billion bushels if you’re converting metric tonnes into bushels)
For soybeans, all eyes will be on South America, namely Brazil. Every other agency has been dropping their forecast for the soybean harvest in Brazil and expectations from the market is that the USDA will follow suit. More specifically, the average pre-report guesstimate is for Brazil to take off about 115.7 MMT of soybeans. Next door in Argentina, not much is expected to change for their soybean harvest, with the number sticking around 55 MMT.
More domestically, US soybean ending stocks are still expected to hang out around that 900 million bushel number. Looking forward, there is some buzz that the quality AND quantity of the 2019 US soybean seed supply is in question. 
Moving over to wheat, again, the current numbers aren’t expected to change too much in the March WASDE. What I’ll be watching for most are the wheat export numbers out of Russia, Canada, Australia and the U.S. Keep in mind that in last Friday’s Breakfast Brief, I mentioned that it’s expected that Russia has enough to justify its wheat exports demand. Similarly, we know Canada and the US certainly have enough wheat to export. In fact, Canadian non-durum wheat exports are tracking 17% higher year-over-year through their Week 31.
Conversely, 2018/19 U.S. total wheat exports are tracking 4% lower than Week 39 of the 2017/18 crop year. Worth noting is that with this sell off in wheat prices over the past few weeks, US wheat prices are now the cheapest in the world.
Overall, today’s March WASDE will help reset the goalposts a little bit but grain markets will easily defer to any action between China and the US, should something real materialize.
Have a great weekend!
Due to travel this morning, there is no futures data but you can view them here.
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