If you would like to receive our technical comments including price projections and cycle analysis for important tops and bottoms, click on the link at the bottom of the commentary to sign up for a 30-day free trial subscription. Follow Ag Watch Market Advisors on Facebook and Twitter for timely information not posted in our blog.
The clock has turned to April which means corn planting is upon us. If weather cooperates, acres may exceed USDA’s estimate of 91.1 million. Their projection is 325,000 acres more than a year ago, but 1.9 million less than expected. Weather through mid-April is expected to have above normal temperatures across the Midwest with below normal rainfall in the east, and normal to above in the west. This favors an early start to planting and possibly more acres. Looking at yield potential, when yields are down one year, they generally rise the next two seasons which is supportive of them being higher in 2021. In other developments, exports continue to shine. Inspections last week were strong at 66.7 MB with Japan receiving the most shipments followed by China and Mexico. Although the fundamental outlook for corn remains upbeat, my greatest concern is that the index funds, or large institutional investors, are sporting their largest long position since August 2014.
The planting intentions report is behind us pegging soybean acres at 87.6 million. This is 4.5 million acres more than a year ago, but 2.4 million less than expected. Weather is now forefront on everyone’s radar and will be scrutinized for any signs of adverse developments as stocks are the tightest since 2013. Meanwhile, it must not be overlooked that a record crop is being harvested in Brazil that will offer competition. Looking at exports, they continue to deteriorate. Inspections last week at 15.6 MB were a marketing year low for the third consecutive week. Since peaking last November, shipments have fallen 78 percent. In the past, they have declined as much as 85 percent. Shipments to China are down 93 percent. Although stocks are historically tight, much of that has been factored into values, and a weather event may be needed to keep the advance going.
The wheat crop has broken dormancy and is generally finding favorable conditions because of recent moisture. Meanwhile, conditions are good in Europe, Ukraine, and Russia. In other developments, export inspections were lackluster last week at 11.1 MB and below the average needed to reach USDA’s projection of 985 MB. With record global stocks overhanging the market, wheat needs a story to tell other than following corn and soybeans.
Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.