** USDA February Crop Analysis: The February report will not alter prevailing range bound price trends at the CBOT with traders turning their attention to the coming US/China trade negotiations. ARC sees the report as positive for corn and soybeans, and neutral to wheat.
** Corn: NASS lowered their US corn production by 206 Mil Bu due to a reduction in yield to 176.4 BPA (down 2.5 BPA) and a fractional reduction in harvested area. 2018 US corn production ended up at 14.420 Mil Bu.
2018/19 world corn production held steady (from December) at 1,099 MMTs, with Argentina’s crop raised 3.5 MMTs to 46 MMTs while Brazil’s held steady at 94.50 MMTs. US corn production was reduced 5 MMTs, while the FSU corn crop was raised by .5 MMTs. 2018/19 world corn end stocks were pegged at 209.8 MMTs, up 1 MMTs from Dec.
** US 2018/19 corn end stocks were forecast at 1,735 Mil Bu, down 46 Mil Bu from December. WASDE cut feed/residual use by 125 Mil Bu via the smaller US crop and corn use to produce ethanol by 25 Mil Bu. Total US 2018/19 US corn demand is pegged at 14,865 Mil Bu – or some 445 Mil Bu more than production.
** 1st quarter US corn feed use was estimated at 2,289 Mil Bu with Dec 1st stocks at 11,952 Mil Bu, down 604 Mil Bu from last year. These stocks were the lowest in years and raises the need for the 2019 US corn crop to exceed 15,000 Mil Bu. The corn market has no room in its supply profile for China to secure 8-12 MMTs of US corn if a trade deal is agreed to. Corn holds the most bullish fundamental and the market demands an additional 2-3 Mil of new crop seedings.
** US December 1st wheat stocks at 1,999 Mil Bu were up 126 Mil Bu from last year. 2nd quarter feed use is forecast at a -76 Mil Bu which is 20 Mil Bu more than last year. US wheat stocks were some 40 Mil Bu larger than what analysts were forecasting and considered slightly bearish.
** US 2019 Winter wheat seeding was a 110 year low at 31.3 Mil acres, down 4% or 1,200 Mil acres from last year. HRW wheat seedings totaled 22.2 Mil acres which was down 4%, while 5.66 Mil SRW wheat was seeded which is down 7%, and soft white was down 3% at 3.44 Mil acres. The wheat seedings data confirms above trendline yields are needed to prevent an important drop in 2019/20 US wheat end stocks. Condition ratings heading into dormancy were below the 5 year average suggesting the need for favorable spring weather.
** 2018 US soybean production fell 56 Mil Bu based on a decline of 200,000 of harvested acres and a .5 BPA fall in yield. The 2018 US soybean crop was 4,544 Mil Bu, some 132 Mil Bu larger than last year.
** US 2018/19 soybean end stocks were lowered to 910 Mil Bu with crush being elevated by 10 Mil Bu to 2,090 Mil Bu while exports were reduced by 25 Mil Bu to 1,875 Mil Bu. ARC questions the increase in US crush amid a much larger Argentine harvest and we estimate another 75 Mil Bu cut in US soybean exports.
ARC’s 2018/19 soybean end stocks are closer to 1,000 Mil Bu. The 1st quarter US soybean residual was a surprising large 234 Mil Bu! This is just below the record set in 2014/15 at 247 Mil Bu.
** WASDE went back and revised South American soybean stocks for numerous years due to Brazil’s large 2018/19 exports and the 2018 Argentine drought. The Brazilian ‘19 crop was cut 5 MMTs to 117 MMTs while Argentina was dropped 500,000 MTS to 55 MMTs. 2018/19 world soybean end stocks fell 8.6 MMTs to 106.7 MMTs. China 2018/19 soybean imports were cut 2 MMTs to 88 MMTs.
** AgResource Report Analysis: There is nothing in the USDA February report that will dramatically alter prevailing trends. ARC argues that new cuts are demanded in China’s 2018/19 soybean imports. However, its spot CBOT corn that holds a bullish story below $3.70, while spot soybeans are a sale above $9.25 while Chi wheat should hold $5.00 heading into spring. The CBOT markets are political and await new trade developments with China.