GRAIN & PRICE WEEKLY REPORT

The markets continue to exercise caution ahead of the fourth and final big USDA report this month. 

Two eagerly anticipated reports from USDA, indeed, will be released on March 31: Prospective Plantings and Grain Stocks. 

This will be the fourth and final round of big USDA reports this month.

The survey of farmer planting intentions at March 31, setting the stage for traders’ focus to turn more to weather.

The average trade guess ahead of the report is 94 million acres of corn and 89 million acres of soybeans. 

To note, that generally most analysts leaning for more tight expectations due to the fact that it is difficult to grow and produce both corn and or soybeans.

The quarterly stocks report will reveal to traders how much inventory is on hand and will allow traders to deduct previous inventories to calculate how much demand was used in the last quarter. 

This demand number will then be used to project future demand through the balance of the year. 

Thus, a quarterly stocks number that would be low, would imply year-end stocks will also be lower than expected. 

Consequently, this next week’s Quarterly Stocks and Prospective Plantings report indeed, will shed light on both old crop supplies on hand, and the potential for new crop supplies for the 2021/22 crop year. 

The price reaction after this next Wednesday’s report is expected to be volatile due to the currently bullish tone of the market. 

In add, since it is also the end of the month and the end of the quarter, a lot of money tends to slosh around after these reports will released.  

In this context we’ve seen some narrowing in the trading ranges this week. 

It feels like there has been a lot going on, but really, corn and soybeans have not changed in price much the last few weeks. 

We’ve had lots of volatility, but we haven’t extended any strength or weakness of any significance.

On the contrary, wheat prices have broken their long-term uptrend.

Watching the soybean oil market, from a long-term standpoint the fundamentals look remain supportive. 

Just for exemple, a suppurt is coming by Goodyear Tire & Rubber Company has committed to using sustainably produced U.S. soybean oil and phasing out petroleum-derived oils from its products by 2040.

Indeed, corn futures lost almost 1% this week, down 5 ? cents in the May contract from the previous Friday close. 

New crop December was less volatile, losing 3 1/4 cents. 

Wheat futures were all lower again.  

Chicago SRW was down 2,2% for the week, and KC HRW was down another 3%. 

MPLS spring wheat was down 2.1% as planting began in scattered locations. 

May KC futures are cheap enough compared to May corn to feed the wheat to livestock. 

Soybean futures were down 15 ? cents per bushel for the week, with all but 2 cents of that coming on Friday.  

Options traders were going for a $14.00 pin ahead of April options expiration. 

Meal lost 1%, but the big story was the 2.6% loss in soy oil. 

Going inside the numbers, all wheat futures prices fell on the week with favorable growing conditions in the northern hemisphere . 

CBOT soft red winter (SRW) futures fell 15 cents to close at $6.13/bu. 

KCBT hard red winter (HRW) futures lost 17 cents to end at $5.68/bu. 

MGE hard red spring (HRS) futures dropped 14 cents to close at $6.13/bu. 

CBOT corn futures shed 6 cents to end at $5.52/bu. 

CBOT soybean futures lost 16 cents to close at $14.00/bu.

A slowdown in export demand and more rain in some growing areas plus a positive outlook for winter crops development in the northern hemisphere pushed the basis generally lower.

Thursday’s Export Sales report showed huge weekly corn sales of 4.481 MMT for old crop and 144,600 MT for 2021/22 crop delivery. 

China was a buyer of 3.89 MMT, but all had been previously announced under the daily reporting system. 

The USDA total of shipped and unshipped export sales (i.e. commitments) is 111% of year ago at 64.987 MMT.  

That’s 2.558 billion bushels! 

Commitments are 98% of the full year WASDE forecast release in March. 

They would typically be 78% by now. 

The weekly Export Sales report also showed 12% smaller wheat sales of 343,600 MT for the week. 

That brought the total wheat export commitments to 25.081 MMT. 

That 921 million bushels is 1% above last year at this time. 

Compared to the USDA projected 20/21 export total of 985 mbu, that would put shipped and unshipped sales at 94% compared to the average pace of 99% for this date. 

Commitments typically go past 100%, with some unshipped and eventually rolled to next year delivery slots.  

About soybean weekly Export Sales report were limited, at 101,800 MT. 

Only 65,000 MT were reported for new crop delivery, as new crop Brazilian beans are cheaper.  

Total soybean export commitments for the MY now total 60.736 MMT. 

That is 99% of the USDA full year forecast, compared to the 5-year average pace of 88% for this date. 

Shipments are 89% of that projection vs. the 73% average. 

The weekly Commitment of Traders report showed spec funds adding 17,275 contracts to their net long position in corn, taking it to 388,175 contracts as of March 23.

It also showed managed money cutting 9,365 contracts from their net long in CBT wheat. 

They were still net long 8,160 contracts on March 23.  

They pruned another 12,100 contracts from their much larger KC HRW net long, taking it back down to 26,242 contracts.

Finally, the large spec funds added 6,813 contracts to their CFTC net long in soybeans last week. 

That meant they were net long 162,853 contracts (futures + options) as of March 23.

About European market, in spite Euronext bounced back Friday without real conviction, it only limited losses. 

Wheat prices remain particularly limited by a very favorable climate for winter crops throughout the northern hemisphere. 

Corn prices are slowed down by an anticipated increase in US rotations this year.

The market, indeed, expects a net increase of US corn and soybeans surfaces. 

Rapeseed, meanwhile, suffers the sharp decline of Malaysian palm and US soybean oil.

Malaysian palm, on its part, widened its losses on Friday due to a further slowdown in exports observed since mid-March. 

The European Commission forecast production of common wheat in the European Union at 126.7 MMT for 2021/22

compared to 117.1 MMT in 2020/21. 

The Commission expects exports to reach 30.0 MMT.

FranceAgriMer estimates that France’s soft wheat crop is 87 percent rated good or excellent. 

The updated rating is a decline from the previous week but an improvement to the 63 percent good or excellent rating reported last year.

Winter barley ratings (85% “good to very good”) are also reassuring, while spring planting is 99% complete. 

At the same time, international demand remains very quiet, especially for old campaign deliveries, which only increases the pressure on the trend. 

France sold a record amount of wheat to China in 2020, 2.5 MMT.

The lower-protein wheat commonly grown in France is similar to domestic Chinese wheat. 

However, an executive with COFCO, China’s state affiliated trading company, this week said that French wheat would be more competitive in the Chinese market if it were higher quality wheat.

In this context, mistreated in recent sessions, Euronext ended the week on a mixed note but mainly lower. 

Indeed, Matif May wheat futures prices fell 5 euros to end at €214,75/t. 

Matif corn June futures slipped 1,75 euros to close at €213,50/t.

Matif rapeseed May futures, tumbled 10,50 euros to end at €506,25/t. 

IKAR, a Russian consultancy forecast Russia’s wheat crop in 2021/22 to be 79.8 MMT compared to 78.0 MMT in 2020/21, meantime it see Exports are predicted at 39.5 MMT.

Australian farmers, following their largest ever wheat crop in 2020, despite are seeing the cost of farm inputs such as fertilizer and machinery climb higher, and supplies may not be available, are betting on back-to-back bumper crops. 

The Australian Bureau of Agricultural and Resource Economics and Sciences, indeed, predicts wheat production for 2021/22 to be 25.0 MMT, down 25 percent from 2020/21.

The Baltic Dry Index (BDI) , an assessment of the average cost to ship raw materials such as grains, coal and iron ore, dropped nearly 5 percent on the week to end at 2,172.

Watching next week market, grain traders will start the week reacting to any surprise positions inherited from the expiration of the April serial options.  

The weekly USDA Export Inspections report is expected on Monday, along with a few scattered state crop condition reports. 

The weekly EIA ethanol production and stocks report will be out on Wednesday. 

As we have said wednesday is also the “event of the season” with the scheduled release of the quarterly USDA Grain Stocks estimates and the Planting Intentions survey results.  

USDA’s weekly Export Sales data will be released on Thursday morning at 7:30 am CST. 

As Thursday is also April 1, USDA will be releasing the monthly Grain Crushings, Fats & Oils and Cotton Consumption reports.