Good morning,
Markets are higher this morning with nearby corn up 7and summer thru fall up 3. Soybeans are up 14.
The February USDA report is usually relatively tame; however, I don’t know if that will be the case this year. Current high prices, the continued South American drought, and issues between Russia and Ukraine are all factors that can wreak havoc on these markets depending on what the USDA does. Of particular note is what the USDA does with the South American data. There is no doubt their crop has been severely impacted by a drought that has lasted months; the only question is how aggressively the USDA reduces the crop size in its report today.
The USDA WASDE will be released at 11am with the following expectations heading into the report:
2021/22 US Ending Stocks (million bu)
| USDA February | Average Est. | USDA January | |
| Corn | 1.540 | 1.498 | 1.540 |
| Soybeans | .325 | .308 | .350 |
| Wheat | .648 | .632 | .628 |
2021/22 World Production (million tonnes)
| USDA February | Average Est. | USDA January | |
| Brazil | |||
| Corn | 114.0 | 113.2 | 115.0 |
| Soybeans | 134.0 | 132.9 | 139.0 |
| Argentina | |||
| Corn | 54.0 | 51.7 | 54.0 |
| Soybeans | 45.0 | 44.2 | 46.5 |
2021/22 World Ending Stocks (million tonnes)
| USDA February | Average Est. | USDA January | |
| Corn | 302.22 | 299.4 | 303.1 |
| Soybeans | 92.83 | 91.0 | 95.2 |
| Wheat | 278.21 | 280.3 | 280.0 |
Updated models continue to show Northern Brazil getting above normal rainfall in the coming 8-10 days, causing delays in harvest. As for Southern Brazil and Argentina, the story stays the same: above normal temps and below normal rainfall. Extreme heat with temps in the mid 90’s spiking into the lower 100’s arrive this weekend and stick around next week. Damage is being done to the crop; the only question is how bad. Brazilian cash prices for corn and beans are nearing record highs.
We expect quiet, choppy trade for much of today as participants set themselves up for the USDA report. The bulls better hope the USDA delivers with material cuts to expected stocks today. The Fund position size is very long and price risk is real if the USDA disappoints. We are not sure what happens this afternoon. As noted before, this report is typically a snoozer but this year is likely to be different.
Have a Safe Day!
Garry Gard
920-348-6844
