Corn And Soybean Lower Seedings Were Surprises, But Stocks Remain Large

Market Analysis

The USDA provided some surprises when their US planting survey showed lower corn & soybean seedings than the trade average estimates. Interestingly, corn’s 88.03 million plantings were 1.3 million below the trade and 2.14 million below last year as producers in the Central and Northern Plains cut their seedings by 1.57 million (MN -,350, NE -250, ND -.370 & KS -.400 million) acres. 2018’s soybean plantings were 1.16 million lower than last year at 88.98 million acres and 2.074 million lower than trade’s ideas. Most of these lower intentions occurred across the Midwest (MN -.250, IA -.200, NE -.100, KS- .250 OH – .250 million) totaling 1.05 million acres.

Not surprisingly, these two planting estimates prompted both corn and bean prices to jump higher after the report. The current drought, stronger wheat prices and lower variable growing costs combined to impact the Plains planting decisions. Strong cotton prices were the main influence across the Southern US while rotational and financial strains came into play in the Midwest.

The USDA’s quarterly stocks revealed higher levels than expected in corn & soybeans. In corn, an 8.888 billion bu. level was 182 million higher than trade average and the 2nd highest level since the 2012/13 season. This level projects the corn’s winter feed/residual demand at 1.44 billion bu., down 6% from 2016/17. This may prompt a 50-100 million drop in corn’s feed usage. But, given this past quarter’s high livestock numbers, I suggest a combination of an underestimate of last fall’s harvest and feed buyers complacence caused this illogical result.

Soybeans March 1 stock at 2.107 billion bu. were also 77 million bu. higher than trade ideas. This suggests a possible underestimate of the crop, but the trade calculation for an 40 million higher residual seemed out of place after Dec 1’s strong level from hefty exports in transit. Wheat’s 1.494 billion bu. stocks hit feed & trade targets.