Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
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Grain markets await supply and demand report
Ole Hansen
Head of Commodity Strategy
Summary: The US grain and soybean markets are steady ahead of the monthly supply and demand report (WASDE) from the US Department of Agriculture today at 16:00 GMT (CET +2, ET-4).
Today’s report will primarily focus on the expectations for how much stock will be left over at the end of the 2018-19 crop season. Surveys carried out by Bloomberg and Reuters are both looking for a jump in corn stocks, thereby potentially adding to the pressure that was seen after the recent prospective planting update reported a big increase in the expected acreage that US farmers will allocate to corn this spring.
In that report soybeans and wheat acreages were both reduced with the US-China trade war having left a huge overhang of soybeans stock while stiff competition from Russia and Europe combined has created a challenge for wheat. Today’s stock report is looking for small increases in both crops compared with last month's update.
In that report soybeans and wheat acreages were both reduced with the US-China trade war having left a huge overhang of soybeans stock while stiff competition from Russia and Europe combined has created a challenge for wheat. Today’s stock report is looking for small increases in both crops compared with last month's update.
The grain and soybean sector remains the most sold by hedge funds. The combined net-short of the three crops is currently at a record for this time of year. Not least corn, which in the week to April 2 reached 247k lots or 1.2 billion bushels.
These developments just before the spring planting and with that an elevated weather-related uncertainty may eventually create some opportunities. Especially so in corn where the expected 2019 acreage may be reduced as farmers with waterlogged fields are forced to make a switch to later-planted soybeans.
These developments just before the spring planting and with that an elevated weather-related uncertainty may eventually create some opportunities. Especially so in corn where the expected 2019 acreage may be reduced as farmers with waterlogged fields are forced to make a switch to later-planted soybeans.
Corn has struggled to recover following the March 29 acreage-report-drubbing which lifted the corn acreage by more than was expected. Speculation that farmers may switch some acreage to soybeans is, however, being reflected in the spread between old crop (ZCK9) and new crop (ZCZ9), both shown below. The spread between the two has doubled to 29 cents/bushel during the past couple of months.
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