USDA Reports Preview

At 11 a.m. CST on Tuesday, March 9, USDA will release its latest supply and demand estimates for the country's principal crops. USDA balance sheets aren't expected to change much this time around, but traders will be interested in South American crop estimates.

Below is a more in-depth look at what we're expecting on Tuesday.

CORN

Ever since USDA reported large corn sales to China in late January, May corn prices have held roughly steady, near its highest spot prices in seven years. The issue of whether China will purchase more U.S. corn in 2020-21 has been looming on traders' minds and will make a difference in where prices go from here.

In the February World Agricultural Supply and Demand Estimates (WASDE) report, USDA increased its estimate of China's corn imports from 17.50 million metric tons (mmt) to 24.0 mmt and its estimate of China's corn demand from 287.0 mmt to 289.0 mmt. Both will be watched again Tuesday.

Dow Jones' pre-report survey of 19 analysts expects USDA to lower its estimate of U.S. ending corn stocks by 42 million bushels (mb) to 1.460 billion bushels (bb). Hog numbers have been on the light side this year, and February's cold snap took a chunk out of ethanol production, so if there is a reduction in corn stocks Tuesday, increased export demand will be the likely source.

Whatever USDA decides regarding corn stocks, any change is apt to be small in March and is unlikely to ruffle the market's bullish view of corn. There have been no deliveries yet in March corn, and March is priced 16 1/2 cents above the May contract -- a bullish sign of commercial demand for limited supplies that corn's narrow basis also hints at.

Dow Jones' survey expects a small reduction in USDA's estimate of world ending corn stocks, from 286.5 mmt to 285.3 mmt, or 11.23 bb. Slight reductions are also expected for USDA's corn crop estimates for Brazil and Argentina, to 108.4 mmt and 47.1 mmt, respectively.

SOYBEANS

Of the three principal crops, soybeans are the most deserving of a lower ending stocks estimate Tuesday, but expectations for change are low. Nine of the 19 analysts in Dow Jones' survey anticipate no change in USDA's March estimate, and the entire survey expects only a reduction of 3 mb to 117 mb. It seems to be widely accepted that USDA is reluctant to release a lower ending stocks estimate, but keep in mind USDA can also signal a tighter market by increasing the import estimate.

Bullish pressures on soybean prices include a U.S. crush pace that is up 6% in the first five months of 2020-21 from a year ago. The 2.21 bb of export sales on the books is another bullish factor, just 40 mb shy of USDA's export estimate for all of 2020-21.

One recent bearish concern for soybeans has been a return of African swine fever in China. I don't expect USDA to reduce China's 100 mmt soybean import estimate, but the number will get attention.

Dow Jones' survey expects USDA to slightly lower its estimate of 2020-21 world soybean stocks from 83.4 mmt to 82.7 mmt. Abundant rain in central Brazil has made the soybean harvest more difficult than usual and there may be some yield loss, but Dow Jones' survey expects a slight increase in USDA's estimate, to 133.2 mmt. Argentina's soybean crop estimate is expected to slip from 48.0 mmt to 47.5 mmt, enduring drier conditions related to the influence of La Nina.

WHEAT

As you probably know, winter wheat has been dormant in the Northern Hemisphere for several months and is about to emerge as spring temperatures turn warmer. While wheat traders are in wait-and-see mode, Australia has been raising a good crop. Australia's official agency, ABARES, estimates the wheat crop at 33.3 mmt, up from USDA's 30.0 mmt estimate and a reason for USDA's world wheat production estimate to be adjusted higher.

Dow Jones' survey is expecting a small increase in USDA's estimate of 2020-21 world ending wheat stocks, from 304.2 mmt to 305.0 mmt or 11.21 bb. Given the larger crop in Australia, USDA's stocks estimate could be even higher, but we also have to keep an eye on demand estimates as USDA made bullish adjustments in that column last month for China and India.

Dow Jones' analysts are expecting no changes in the U.S. balance sheet for wheat. There is a risk the export estimate could be adjusted lower. U.S. wheat export sales are on track with USDA's 985 mb estimate, but actual shipments are down 3% from a year ago with just three months left in 2020-21. On the other hand, as long as corn is trading above $5, there is always a chance USDA could tweak wheat's feed demand estimate higher.

With a lot riding on winter wheat conditions this spring, KC wheat's sideways range won't last for long, but Tuesday's report isn't likely to cause the breakout many are watching for.

Join our webinar at noon CST Tuesday and I'll explain the numbers of the day, talk about any surprises that might emerge and comment on the market's latest clues. Register for Tuesday's webinar at: https://ag.dtn.com/….

WORLD PRODUCTION (million metric tons) 2020-21
	Mar	Avg	High	Low	Feb	2019-20
CORN
Argentina		47.1	48.0	46.5	47.5	51
Brazil		108.4	110.0	106.0	109.0	102
SOYBEANS
Argentina		47.5	48.0	46.0	48.0	49
Brazil		133.2	134.0	132.0	133.0	126
U.S. ENDING STOCKS (Million Bushels) 2020-21
	Mar	Average	High	Low	Feb	2019-20
Corn		1,460	1,561	1,302	1,502	1,919
Soybeans		117	125	110	120	525
Wheat		836	856	816	836	1,028
WORLD ENDING STOCKS (million metric tons) 2020-21
	Mar	Avg.	High	Low	Feb	2019-20
Corn		285.3	287.0	282.0	286.5	303
Soybeans		82.7	84.5	81.3	83.4	95
Wheat		305.0	309.0	303.2	304.2	300

Todd Hultman can be reached at todd.hultman@dtn.com

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