Highlights of March U.S.D.A. report

(Joseph F. Schmidt) – Global wheat production is estimated “up” 1.1 million tons and ending stocks fell 3.5 million—a relatively “neutral” finding.  U.S. ending stocks were cut 20 million bushels, due to higher exports (+25) and lower food usage (-5).  At 825 million bushels, the U.S. carryout was 14 million below trade expectations.

U.S. soy beans were left totally unchanged (again)—the trade had estimated a reduction of 25-50 million bushels; but this did not happen.  U.S.D.A lowered Brazil soybeans to 68.5 million metric tons versus trade estimate of 69.338.  Argentina was a surprise at 46.5 million metric tons – down 1.5 million metric tons from their earlier estimates.  They kept China imposts of soybeans unchanged at 55 million metric tons.  Net of all calculations, U.S.D.A. lowered world end­ing oilseeds stocks by 3.4million metric tons (basically South America) from 71.18 to 67.77 million metric tons.

On soy oil the report is even more surprising.  They left everything alone except the lowered domestic food demand by 100 million pounds to 2,415 billion pounds??  No change was made to biodiesel number.

Corn – left unchanged and kept carryout at 801 – which was big surprise to the market.  Overall – the market was very surprised that the U.S.D.A. left soy­beans corn totally unchanged and then only changed soy oil by lower food demand.  It is also surprising that they quickly dropped their South America numbers so far (not that we were not already trading these numbers) but it was assumed that U.S.D.A. might take one more report to get aligned.

Report was more or less considered bearish on both beans and corn – but you still have to wonder when you look at world stocks and how tight we have got­ten.

Initial reaction to U.S.D.A. reports—Neutral/slightly negative.