3/11/19: Mark's "Market Talk" Blog

USDA report blues, here comes the rain, how short will the funds go

The USDA released their March grain stocks report Friday. No one expected a silver bullet and we didn’t get one. They confirmed what most feared as they lowered corn usage 100 million bushels. They took 25 million from ethanol production and 75 from exports. After running ahead of schedule the corn exports have hit a roadblock as cheaper South American corn became available. The wheat market has imploded the past 2 months so corn has had to follow it down as some feeders made the switch to wheat. Meanwhile the funds continue to sell into this and have become extremely short for this time of year. For the week corn closed down almost 9 cents and the May contract is now trading at its lowest level since last September. So now we have to ask the question, is all of the bad news in? The only answer I have today is, let’s hope so. Looking forward any talk of delayed corn planting would be positive the corn market. With the trade expecting a big shift to corn acres any thought of that not happening could give the market a reason to rebound. Beans didn’t fare any better last week as they closed down 16 cents. The stocks report was neutral to the bean market but they still fell 7 cents Friday. The carryout was reduced a measly 10 million bushels to 900 million. If you look at this report for the past 15 years the projected bean carryout averaged 242 million bushels. That gives a clear picture of what we are up against. A large portion of this 900 was caused by the trade war we are involved in. But some of it is over production and unless the weather reduces our new crop we will be facing a larger carryout next year. As I write this the forecast is for an inch of rain this weekend on top of the snow and ice we have on the ground. The thaw needs to start but none of us want this type of weather. March can be the season of mud and right now it appears the next 2 to 3 weeks will live up to this.

 

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