Soybeans close lower. Wednesday, March 9, 2022

Among the surprises in Wednesday’s World Agricultural Supply and Demand Estimates (WASDE) were growing global wheat stocks and Brazil’s weather-stressed soybean crop that shrank faster than analysts expected from an often cautious monthly revision by USDA.

Only the wheat market reacted strongly, driven as much by the day’s news as USDA’s estimate.

At the close, the May corn contract finished 20¢ lower at $7.33. July futures ended 17¾¢ lower at $7.08¼. December futures settled 7¢ lower at $6.36¾.

May soybean futures closed 18¢ lower at $16.71¾.

July soybean futures ended 12½¢ lower at $16.43¼. New-crop November soybean futures settled ½¢ higher at $14.73¾.

May wheat futures ended 85¢ lower at $12.01½.

May soymeal futures settled $1.40 per short ton higher at $474.70.

May soy oil futures closed 1.60¢ lower at 74.15¢ per pound.

In the outside markets, the crude oil market is $8.61 per barrel lower (-6.96%) at $115.09, the U.S. dollar is lower, and the Dow Jones Industrials are 798 points higher (+2.45%) at 33,431.

On Wednesday, the USDA pegged the 2021 Brazilian soybean production at 127.0 mmt vs. the USDA’s estimate last month of 134.0 mmt. and the trade’s expectation of 128.1 mmt.

For corn, Brazil’s output is seen at 114.0 mmt. vs. the trade’s expectation of 112.7 mmt. and the USDA’s February estimate of 114.0 mmt.

For Argentina’s soybean output, the USDA pegged its crop at 43.5 mmt. vs. the USDA’s February estimate of 45 mmt. and the trade’s expectation of 43.1 mmt.

Argentina’s 2020/2021 corn crop is pegged at 53.0 mmt vs. the USDA’s previous estimate of 54.0 mmt. and the trade’s expectation of 51.6 mmt.

For corn, the USDA pegged the U.S. new-crop ending stocks at 1.44 billion bushels vs. the trade estimate of 1.455 billion bushels and the February estimate of 1.54 billion bushels.

For soybeans, the U.S. ending stocks were 285 million bushels vs. the trade that expected the USDA to print 273 million bushels today. In February, the USDA’s estimate was 325 million.

In its report, the USDA pegged the U.S. wheat ending stocks at 653 million bushels vs. the trade’s expectation of 627 million and compared with the February estimate of 648 million bushels.

On Wednesday, the USDA pegged the world’s corn ending stocks at 301 mmt. vs. the trade’s expectation of 299.6 mmt. and the USDA’s February estimate of 302.2 mmt.

For soybeans, the world ending stocks are estimated at 90 mmt. vs. the trade’s expectation of 88.6 mmt. and the USDA’s February estimate of 92.8 mmt.

For wheat, the USDA pegged world ending stocks at 281.5 mmt. vs. the trade’s expectation of 277.4 mmt. and the USDA’s previous estimate of 278.2 mmt.

“The action has been in wheat,” says Jake Hanley of Teucrium funds. “The USDA’s global ending stocks on wheat came in higher than expected – the reason being that reduced exports from the Black Sea suggests an inventory build for those countries. What’s more, the USDA points out that higher prices may reduce wheat import levels for counties such as Turkey, Egypt, the EU, etc.”

“So, simultaneously we’re looking at higher global ending stocks and higher prices,” he adds. “It is all about availability. There is plenty of wheat, the question is, can it get to where it needs to be. Note, this report is dealing with the wheat that has already been harvested. The big question for us has to do with the wheat that is currently in the ground. That wheat will grow, but will it be harvested. If this conflict drags on, farmers may be off fighting a war vs. tending their fields. At that point, markets could potentially be dealing with both a logistics issue (e.g., shipping out of the Black Sea) and a lack of production issue.”

USDA’s World Agricultural Supply and Demand Estimates today had no dramatic impact on corn and soybean markets but Chicago May wheat is locked down 85¢ after the WASDE report increased global ending stock by more than trade expectations.

USDA projects marketing year ending wheat stocks at 281.5 million metric tons (mmt), which is above last month’s WASDE number of 278.2 mmt and above pre-report trade guesses of 277.4 mmt.

Adding to the bearish sentiment on wheat is today’s announcement by the government of India that it will release 500,000 metric tons of wheat from its large stockpiles.

“When you look at the stocks-to-use ratios, despite all the panic, the world is not going to run out of corn and wheat,” says Al Kluis of Kluis Commodity Advisors.

For corn and soybeans, global ending stocks were both above trade guesses. WASDE puts corn stocks at 301 mmt, down from USDA’s February estimate of 302.2 mmt but above the trade guesses of 299.6 mmt. The soybean stocks estimate of 90 mmt is down from the February WASDE number of 92.8 mmt but above the trade expectation of 88.6 mmt.

At midsession Wednesday, the May corn contract is 12¼¢ lower at $7.40¾. July futures are 12¼¢ lower at $7.13¾. December futures are 5¾¢ lower at $6.38.

May soybean futures are ¼¢ higher at $16.90.

July soybean futures are 4½¢ higher at $16.60¼. New-crop November soybean futures are 2¾¢ lower at $14.76.

The May wheat futures contract is 85¢ lower at $12.01½.

May soymeal futures are $7.70 per short ton higher at $481.

May soy oil futures are 0.60¢ lower at 75.15¢ per pound.

In the outside markets, the crude oil market is $8.61 per barrel lower (-6.96%) at $115.09, the U.S. dollar is lower, and the Dow Jones Industrials are 798 points higher (+2.45%) at 33,431.

In early trading Wednesday wheat drops sharply while corn is lower and nearby soybeans are up.

The May corn contract is 8¼¢ lower at $7.44¾. July futures are 11½¢ lower at $7.14½. December futures are 5¢ lower at $6.38¾.

May soybean futures are 7¢ higher at $16.96¾.

July soybean futures are 1½¢ higher at $16.57¼. New-crop November soybean futures are 2¢ lower at $14.71¼.

The May wheat futures contract is 72¼¢ lower at $12.14¼.

May soymeal futures are $1.20 per short ton higher at $474.50.

May soy oil futures are 0.10¢ lower at 75.65¢ per pound.

In the outside markets, the crude oil market is $6.60 per barrel lower (-5.34%) at $117.10, the U.S. dollar is lower, and the Dow Jones Industrials are 560 points higher (+1.72%) at 33,192.

As he anticipates today’s USDA supply and demand estimates, Bob Linneman of Kluis Commodity Advisors is wondering, “Will the USDA ramp up corn and wheat exports because of the war in Ukraine? On a daily basis in the last week, the USDA is announcing sales of corn, wheat and soybeans.”

(Today was an exception. USDA did not release any export sales reports.)

“If the war drags on in Ukraine, then future USDA global supply/demand reports will show a large drop in projected corn and wheat ending stocks,” he adds in an early morning note to clients. “However, when I look at the ending stocks numbers, the commodity with the tightest stocks-to-use ratio (by far) is soybeans.”

As traders await today’s WASDE report, will world events outweigh USDA numbers?

“With wheat running wildly and volatility being the new normal, it is surprising how little corn and soybeans have moved,” says Mike North of ever.ag. “At 11 a.m. [CST], the USDA will release its monthly WASDE report. Some of the current pause of corn and soybeans may be a matter of waiting for updated numbers.

“While Ukraine remains the top focus of market participants, for a moment we will stop to consider the current size of the South American crop and how the more limited crop in conjunction with current geopolitical events affects buyers across the globe,” North adds. “Among them will be a sizable domestic ethanol industry. With crude oil approaching $130/barrel, fuel markets are appreciating in value very quickly giving rise to expanded ethanol margins and the corresponding demand for corn. There is much to consider in markets like the ones we are currently in. Please exercise temperament before taking any rash actions.”

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