The USDA report is due to release Thursday March 29th at 11 am (cst) and will include the quarterly stock numbers on wheat, soybeans, and corn as well as the prospective planting intentions.
The agricultural markets have picked up in volatility recently. Initially it was due to the drought in South America sending these markets into a rally but that has rounded out now and our focus has shifted to fear of the potential trade war. China has made threats to retaliate against the United States. If they did take action and reduce the number of agricultural products they want to import we could see the market account for that initial loss in demand given the fact that china is the world’s largest buyer of soybeans. These ag markets don’t like this current uncertainty, however at the end of the day China has limited options — at least for the time being. It relies primarily on North and South America for these crops. China’s growing population and U.S. producers need each other and there should be plenty of room to find middle ground rather than taking extreme measures. There has also been an increase in the demand of corn from China as well. They have been utilizing ethanol to reduce pollution by blending this renewable fuel into its gasoline supply. Therefore, I believe we can anticipate these market demands to remain strong, however definitely look to utilize strategies that can mitigate that risk in case the market trends do start to shift.
The estimated planting intentions of the farmers is looking to break record numbers anticipating a soybean acreage estimate of a little over 91 million acres. Corn average estimate is 89.4 million acres compared to last year’s 90 million acres planted. Corn does cost more to put into the ground compared to beans which is what could also be encouraging farmers to plant more soybeans over corn. Wheat has shown sub-par demand and has an average planting estimate of 46.29, which is almost the same as last year’s 46.01 however just slightly higher.
Overall, I think we can expect to continue following the anticipated trends unless there is some substantial news that shifts the world’s agricultural economy. We are expecting it to be a rainy spring, but April showers bring May flowers and I think all of us here in Chicago are looking forward to that. Please note that all markets will be closed tomorrow, March 30th. From our RJO Futures family to yours I wish you a happy and healthy holiday!
Corn May ’18 Daily Chart