On The Money Grain Commentary 3-12-15

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Corn Outlook:

Corn is looking to party, but can find no one willing to dance.  For the past couple of months, the market has been range bound, as it faces crosscurrents from adequate supplies and the likelihood for fewer planted acres this spring.  Meanwhile, supplies became tighter this month, as the USDA lowered their ending stocks estimate for 2014-15 50 MB to 1.777 BB.  Global stocks fell 2.0 percent to 185.2 million tons.  While stocks are considered adequate, if fewer acres are planted, there is a greater need for Mother Nature’s cooperation during the growing season.  Export inspections were better than expected at 46.4 MB, and above the average needed to reach USDA’s target of 1.8 BB.  The trend following funds have been liquidating their long corn position since late December, but added 10 MB to their position last week increasing it to 130 MB.

Bean Outlook:

The Brazilian truckers strike that took center stage in mid February-early March has calmed down, as the truckers and unions are in meetings negotiating freight rates.  In the meantime, roadblocks have been removed allowing a record soybean crop to be transported to coastal ports for shipment.  Harvest in Brazil is moving along at 38 percent complete, running below the average of 42 percent.  In the March Supply-Demand Report, USDA left 2014-15 ending stocks of soybeans unchanged at 385 MB, but bumped up global stocks slightly to 89.5 million tons.  This puts stocks-to-usage at a record 31.0 percent.  Brazil’s production was unchanged at 94.5 million tons, as well as Argentina’s crop at 56.0 million.  Export inspections were below estimates at 22.9 MB, but above the average needed to reach USDA’s projection of 1.790 BB.  Last week, the trend following funds liquidated 130 MB from their short position reducing it to 45 MB.  However, with the increase in global stocks, and greater U.S. plantings becoming a reality, they will probably become more aggressive in their selling.  For now, the next smoking gun in the grains will be the Planting Intentions Report on March 31st.

Wheat Outlook:

Wheat has been dogged the past couple of months from the dollar surging to a twelve year high.  However, the wave pattern of the greenback shows that it is soon approaching an important top with the pullback lasting several weeks or months.  Meanwhile, the crop in the Plains is in need of a rain.  In the supply-demand report, 2014-15 ending stocks were lowered slightly to 691 MB with world stocks falling 200,000 tons to 197.7 million.  While stocks have tightened, they are more than adequate.  Exports continue to struggle with inspections last week at 13.8 MB.  Shipments are running 70 MB below the pace needed to reach USDA’s target of 900 MB.  The trend following funds lightened their short position 15 MB last week reducing it to 250 MB.

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