The main event of the day was obviously the March issue of the USDA WASDE report.


Soybeans were definitely the hot topic. On the old crop, an adjustment of Brazilian beginning stocks (-0.58MT) drove world ending stocks down by -0.6MT. But this is a detail, new crop was obviously the main point to focus on. On the US balance sheet, USDA is taking a very strong pessimistic hypothesis. Despite a great start of the season on exports, they think the abundance of Brazilian beans will make the US struggle at the end of the season and they reduced the exports by -0.68MT to 55.11MT. On the other side, they increased the crush by +0.27MT to 52.8MT. Therefore, US ending stocks are heavier by +0.40MT to 11.84MT. South America was however at the centre of the attention. And USDA topped expectation: they increased the Brazilian production by +4MT to 108MT and left the production unchanged in Argentina (55.5MT). Still in Brazil, more soybeans means more crush (+0.5MT to 41MT) and more exports (+1.5MT to 61MT). Brazilian ending stocks are therefore up +1.42MT to 20.8MT. China imports are up +1MT to 87MT, China non-crush use is increased by +0.3MT also. World ending stocks are up +2.44MT, representing 24.48% of the production or 24.32% of the use. This is a very comfortable level, the report is bearish. It’s been a good year for soybeans, world production went up by +27.98MT and ending stocks by +6.23MT. Planting more soybeans in the US seems to be the strategy, but is this the good one? But tough to find a row crop that have an outstanding competitiveness compared to the other these days…

Corn could show a few surprises. On old crop, no major change, world ending stocks are up +0.48MT mainly due to and adjustment of Argentinian exports (-0.8MT). The new crop was obviously more interesting, especially in South America. Market was expecting Argentinian corn production to be slightly lowered, but it’s actually been raised by +1MT to 37.5MT. Brazil was seen on the upside, but for something like +1.28MT, and it was actually +5MT, USDA is now pegging the crop to 91.5MT. Still on the production side, South Africa is recovering from previous crop and USDA increased production by +1.6MT to 14.6MT (South African crop would raise by +6.39MT from one crop to another after the old crop was badly hit by drought). It brings the world production to 1,049.24MT (+9.03MT compared to the previous estimates). World demand is seen growing as well with feed use raised by +1.18MT and non-feed use by +5.22MT. Therefore, ending stocks are raised by +3.12MT to 220.68MT, representing 21.03% of the production or 21.23% of the use. This is also a very comfortable level, the report is bearish. From one season to another, production has increased by +87.39MT and ending stocks by +9.81MT. It will be tough to do better!

Wheat was just expected to be a reminder, no big change was expected. Old crop ending stocks were lowered by -0.48MT mainly to an adjustment of the Australian crop by -0.33MT. On the new crop, Argentinian production is raised by +1MT to 16MT and Australian crop is also raised by +2MT to 35MT. It takes the world crop to 751.07MT (a +2.83MT increase compared to previous report). It has a direct impact on exports, Australian exports are now pegged to 25.5MT (raised by +1MT) and Argentinian to 10.1MT (raised by +1.2MT). World use is increased by +1.02MT to 741.42MT, this is driven by the Indian consumption which is raised by +1.3MT to 98.14MT. World ending stocks are therefore raised by +1.33MT to 249.94MT, this is 33.28% of the production, and 33.71% of the use. In other words we have the confirmation that a general and widespread crisis would be needed to create an imbalance in the S&D and report can be seen bearish. Bottom line, despite 2 significant issues (EU got hit with -15.34MT from one crop to another, and North Africa by -5.78MT), world production increased by +15.82MT and ending stocks are set to grow by +9.65MT from one season to another. So really, to change the trend, everything need to be bad at the same time and as wheat conditions are pretty good in northern hemisphere, it could just be another tough season for farmers as far as prices are concerned.

What about market reaction? Soybeans got hit badly and closed leading the way down to -10.75 cents. With this reminder the $10 level is now at risk on K7. Corn also logically moved down, closing down -5.25 cents. Wheat closed down in Chicago (-3 cents) and in Kansas (-3.50 cents) but rebounded in Minneapolis (+4.25 cents). A bit of profit taking from those who sold the Minneapolis premium to Kansas or Chicago most probably as there’s not much in the report that would justify it, and on the other news (wild fires), it’s probably more Kansas and Chicago that should be bullish all other things equal. Premium has been hammered, time to take a breather. On the other side of the pond, market closed a couple of ticks higher on the MATIF and +€1.25 on CME EU.


Night session is still digesting the USDA WASDE report, Soybeans are down -6.25 cents, the level of $10 is becoming technically appealing. Corn is down -1.25 cent, Wheat is down also -1.25 cent in Chicago, a couple of ticks down in Kansas and Minneapolis is still up, +3.25 cents. MATIF K7 is down -€0.75 while CME EU is flat.


No surprise on the US export sales, wheat commitments reached 431.6kT for the week, corn was at 834.1kT and beans at 515.1kT, the negative momentum on the sales should show up in the inspections quickly to ‘hope’ not to exceed the new lowered export target.


Sout Korea’s KFA bought 60,000T of Corn. Turkey bought 130,000T of EU wheat. Saudi, Iraq and Tunisia still on.


Is bird flu back in the US? There was chickens infected in Tennessee, but the particular virus involved was low-pathogenic.


Oil is now trading with a $49 handle. Saudi is disappointed to see the stock levels falling at a lower rate than expected and intend that the 6 month deal won’t probably be enough: an extension is possible. They haven’t talk about a new cut, but tough to imagine they will get away without it. NYMEX Crude is trading just below $49.75 with ICE Brent at a $2.75 premium.


US Unemployment claims were a bit more than expected to 243kT yesterday. Also, no surprise, ECB left its rate unchanged, Draghi said the situation is losing a bit of its sense of urgency, in other words, it’s getting better according to ECB. Bond purchasing program is staying the same and is expected to come from €80b to €60b in April and not run beyond December 2017. Later today, NFP and US employment rate. EURUSD is back above 1.06. GBP is still just above 1.2150, not feeling the pain too much of a very bad monthly manufacturing production (-0.9% versus -0.6% expected).

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