Pre-planting balance sheet meets trade expectations

MINNEAPOLIS — There were no surprises in the agricultural supply and demand estimates report April 9 as the trade turns its focus to planting season and the upcoming weather conditions.

Ami Heesch, CHS Hedging market analyst, gave the highlights of the U.S. Department of Agriculture’s report in a Minneapolis Grain Exchange-hosted teleconference.

The WASDE corn balance sheet provided the most support in the market after is release.

“For the 2020-2021 corn balance sheet, feed usage was raised by 50 million bushels, ethanol was up 25 million bushels, exports up 75 million bushels, lowering our ending stocks 150 million bushels to 1.352 billion. That’s pretty close to being in line with what the trade was looking for in expecting increases in corn for ethanol use and exports.”

What were the changes of note in the soybean balance sheet?

“Soybean crush was lowered by 10 million bushels, raised exports by 30 million bushels, residuals were dropped by 17 million bushels to give us unchanged ending stocks of 120 million bushels.

“Soybeans had their story early on and maybe we see another story later on in the summer as people try to get soybeans.

“Argentina soybean production was left unchanged at 47.5 million metric tons. Brazil soybean production was raised by 2 million metric tons from last month to 136 million metric tons. So, I think you’ll see some offset there. Brazil will offset shortfalls in Argentina going forward.”

“I think we probably still have some risk premium in some of these markets.”

—  Ami Heesch, CHS Hedging market analyst

As was the case with soybeans, the wheat report was also neutral, with the numbers coming in near the pre-report trade estimates.

“All wheat ending stocks were up 16 million bushels to 852 million bushels. I think you’re still going to see some strength in the spring wheat just on continued dryness. There is some dryness in the wheat areas of North Dakota, the Canadian prairies, Montana and parts of South Dakota.

“They’ll continue to look at the weather premium in that. There’s some chatter about possibly planting more spring wheat. They won’t plant corn because corn takes too much water which they don’t have in a lot of those places.

“Hard winter wheat domestic use was down 23 million, exports are down 5 million, raising ending stocks by 28 million bushels. I think the winter wheat has gotten a lot of blessings from some rain.”

What do you foresee in the commodity marketing going forward?

“As of now (immediately after the report’s release) we have wheat still being strong on the board, soybeans are a little bit unhappy and corn is still going strong. So, I think we probably still have some risk premium in some of these markets.

“Probably look for another reduction in corn going forward. We might see another reduction in spring wheat going forward if they plant it and it doesn’t yield as well or they don’t think it’s going to or they don’t plant it because it’s too dry.

“Look for some strength in the spring wheat and corn going forward.”