Jon Scheve with weekly market commentary made on March, 24, 2023
For the week May corn finished up 9 cents while May beans were down 48 cents. Corn continues to see good export demand and is trading 37 cents off the lows posted only 2 weeks ago. If export announcements continue corn has upside potential. Beans have the opposite problem with reports that Brazilian beans are priced low enough to be imported into the United States. The South American crop is the largest in history despite a record drought in Argentina. This is likely a major reason for a $1.20 per bushel drop in prices over the last month. Stocks & Acreage Report The upcoming March 31st USDA report is highly anticipated for several reasons:
It provides the estimated remaining stocks stored on farms and at commercial elevators.
It shows how tight stocks are and if price rationing is necessary.
It includes the first official planting intentions estimate for the upcoming year based upon surveys filled out by producers in early March.
Last month the USDA Economic Outlook Forum estimated 91 million corn acres and 87.5 million soybean acres would be planted in 2023. However, these are budgetary derived numbers and not based upon actual producer surveys. Therefore, the market will be comparing these estimates and other private estimates until the March 31st report. Prices will then adjust accordingly. How Important Is Each USDA Report? Many people say the end of March report day is important, and it is, but how does it compare with other reports throughout the year? Which ones on average impact the market the most and least over the year? I have ranked each of the 15 report days in order of importance, based upon my opinion, and provided rationale for why and how the market and farmers can be impacted by each one. #1 – End of June Stocks and Planted Acreage Report This is the most important report day of the year because it provides the first real estimate of the final planted acreage for the upcoming harvest. This is significant, because a million-acre swing of one crop is equivalent to a 2 bushel per acre national yield change. The report also includes estimates of old crop supply remaining in storage and expected upcoming carryout. #2 – August WASDE (World Agriculture Supply & Demand Estimates) This report usually provides the first glimpse of expected national yields after corn pollination is complete. This combined with planted acre estimates from the end of June acreage report gives the market a clearer picture of next year’s supply potential. #3 – January Report Despite yield estimates from August through November, this report shows final national yields for the fall harvest. Plus, it includes the first stocks report of the new crop. #4 – End of March Planting Intentions and Stocks Report Some of the reasons for the importance of the report are detailed above. One reason this report is not in my the top 3 is because weather will dictate which crop actually gets planted. Additionally, a major change in prices after the report could cause a few producers to switch some intended acres to another crop in April or May. #5 May WASDE Report This report provides the first look at new crop demand and yield potential, which provides a baseline the market will work against for the year. After this, going forward, the perceived weather variability and its impact on supply and demand generated from this report will cause fluctuations in the market. These top 5 reports have by far the biggest impact on the market. The next 9 report days may have some impact on the market, but it is usually much less. #6 – July WASDE Report This provides updated stocks and planting acreage mix from the end of June report. There are rarely yield changes in this report, and when there are it only makes the August report more anticipated. #7, #8, #9 – September, October & November WASDE Reports These 3 are combined because while yield trends are updated monthly from the August report, they are not generally big market movers. Even if there is a big adjustment in one of them, or a trend is spotted, the January report will still overshadow them all. #10 – April WASDE Report This report is overshadowed by the March 31st Planting Intentions and Stock Report because it does not include new crop supply and demand figures yet like the May report. That is why it remains lower on the list. #11 – June WASDE Report This report may have minor supply and demand adjustments for both old and new crop, but it’s too early for weather to impact and change new crop yields. The market will instead be focused and waiting for the biggest report of the year at the end of June. #12 – September Stocks Report This is the final stocks report of the old crop. It should be a bigger report day, but the numbers provided have already been anticipated and much of the report is a look backward. And since it is a futures market, there is generally little for the market to react to in the report unless there is a major surprise. #13, #14, #15 – March, February, December WASDA Reports These 3 reports provide few changes to overall US supply and demand estimates. However, as South American competition for global exports increases, these reports may become more important to price direction in the future. Still, they will not likely ever over-take The Big 5. Importance of USDA Reports I am sure some may disagree with my order for a variety of reasons. For instance, speculators and day traders may think every report comes with new opportunities and risk adjustments. Others will complain that USDA reports are a joke or useless. However, it is important to remember that most market participants DO care what the USDA says and nearly all the ag economy revolves around the information provided in these reports. That is why it is important to pay attention to them, know which ones have the most impact on the market, and what to expect from each one. Looking Forward On Friday at 11 AM CST the 4th most important report of the year will provide the market with some new information that may or may not impact prices. The last two March 31st reports have had big moves for corn and beans while the previous 8 years saw the corn market move less than 15 cents while beans had 7 years of moves less than 25 cents. The week after the report is published, everyone will shift their focus back to Chinese exports for 1-2 months until weather variability becomes a huge market factor once again.
Jon Scheve Superior Feed Ingredients, LLC
9358 Oak Ave Waconia, MN 55387 jon@superiorfeed.com