Good afternoon,
The March WASDE had a lot of moving parts to it on the world balance sheet as South American summer crop sizes have become better known. As expected, reductions to Argentina’s crop sizes due to the ongoing severe drought in the country continued to be reflected in the world numbers as corn production in the country was reduced by 3 mmt to 36mmt and soybeans were reduced by 7mmt to 47 mmt. Both of these numbers are perhaps on the high side of what the market is expecting out of these crops at this point and I would anticipate the USDA still has some revisions in the month to come.
Brazil soybean expectations were raised by 1 mmt which helped to keep the world balance sheet from falling too much but total reductions of just under 4mmt on the world ending stocks number were realized at 94.4 mmt.
| World Soybean Supply and Use | |||||||||||
| Crop Year | 2008/2009 | 2009/2010 | 2010/2011 | 2011/2012 | 2012/2013 | 2013/2014 | 2014/2015 | 2015/2016 | 2016/2017 | 2017/2018 | |
| Beginning Stocks | 52,668 | 42,870 | 60,690 | 70,565 | 53,232 | 55,213 | 61,587 | 77,518 | 78,284 | 96,651 | |
| Production | 212,072 | 260,760 | 264,400 | 240,440 | 268,463 | 282,751 | 320,013 | 313,709 | 351,315 | 340,857 | |
| Imports | 77,903 | 87,502 | 89,786 | 94,552 | 97,192 | 113,067 | 124,362 | 133,325 | 144,281 | 151,270 | |
| Exports | 77,212 | 91,474 | 91,706 | 92,186 | 100,797 | 112,777 | 126,129 | 132,463 | 147,455 | 150,603 | |
| Crush | 194,626 | 210,220 | 221,978 | 229,903 | 231,511 | 242,919 | 264,350 | 274,930 | 288,498 | 300,857 | |
| Domestic Consumption | 222,561 | 238,968 | 252,605 | 260,139 | 262,877 | 276,667 | 302,315 | 314,345 | 329,774 | 343,778 | |
| Ending Stocks | 42,870 | 60,690 | 70,565 | 53,232 | 55,213 | 61,587 | 77,518 | 77,744 | 96,651 | 94,397 | |
Looking at the US balance sheets. US wheat ending stocks were raised by 25 mmt reflecting the US slow export sales pace and it’s relative noncompetitive position after the recent rally. FOB prices within striking distance of Russian values back in January but have moved back to more than 30 bucks in premium per tonne higher than current Russian values. The book keeping measures in the current WASDE help to reflect total export commitments which were lower than the Feb USDA export expectations.
Corn ending stocks were reduced for a second month and for some reason most of the market was looking for a flat to higher number. Exports sales have been meteoric as of late and the additions of 175 mbu to export usage accurately reflects that. Ethanol consumption had been outpacing the USDA’s Feb number by roughly 2% so an additional 50 mbu or roughly 1% reflects the ideas that the current low price for inputs will keep the corn grind strong.
Soybean ending stocks rose to 555 mbu which I think surprised the market if taken at face value. The narrative has been expecting some demand shifting from SA to US for soybean crush and exports, but with the pace of soybean exports through the end of Feb (ie not including the huge total this morning) it argued for a much larger ending stocks number that wasn’t fully reflected in the balance sheet thru February. The rise in ending stocks is accounting for a pickup in crush that is not fully realized but US export sales thru this morning’s number still reflect a commitments pace that is 8% behind last year with Brazil having an adequate crop coming to market which is almost as large as last year’s crop it will keep sales pickups incremental thru the rest of the marketing year in my opinion.
