NEW LOWS IN WHEAT & USDA BRAZIL ESTIMATES

Written By Sebastian Frost

MARKET UPDATE

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Overview

Grains lower across the board as corn and soybeans give back yesterdays gains while Chicago wheat makes a new low.

Wheat was under heavy pressure as Russia continues to sell cheap wheat around the world while the US misses out on most of the business. Prices in Europe also continue to fall which negatively effects prices here in the US.

Some of the weakness from wheat spread over into corn, but overall there was just a lack of bullish news today.

Brazil weather is becoming less impactful for the soybean crop, as their harvest is roughly 50% complete.

There is still concerns with the second corn crop in Brazil however. They are supposed to get some rains here shortly, but the question is how big of an impact will this make on their already poor soil moisture situation.

Dr. Cordonnier left his estimates for Brazil unchanged. With 145 MMT for beans and 50 MMT for corn, but his bias remains neutral to lower moving forward.

The rumor yesterday was that China was back in the market. As they bought beans from Brazil and corn from Ukraine. But the US hasn’t seen any business thus far.

Friday we get the USDA report. Most are looking for the US numbers to be a non event, as there will be no production changes made until May, and we will likely not see any domestic changes made. As the USDA historically waits until April to do so. However, some think we will see slight cuts to export demand in beans and wheat.

The trade is expecting:

  • Corn carryout: 2.159

  • Bean carryout: 319

  • Wheat carryout: 657

The South America numbers will be the ones to watch, as the USDA so far thinks the Brazil crop is bigger than everyone else on the planet does.

Expect the numbers to be lower. But will the USDA lower them as much as they should? Probably not. But at least it will show a trend that the crop is getting smaller.

Here are two great charts from Kevin Van Trump. He shows how the USDA's production estimates for Brazil have shaped up. He compared May, to March, to the Final.

No clear pattern at all, but I found it interesting.

Let's jump into the rest of today's update..

Today's Main Takeaways

Corn

Corn lower today, but it was inside day. Meaning we did not take out yesterdays highs nor yesterday’s lows. So today's price action does not give much clarification.

Yesterday we mentioned that IF we do get early planting, this will more than likely be negative for prices when and if planting does get rolling early and smoothly. A fast planting also almost always means higher acres than originally expected.


If that were to happen, I would expect……..

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IN TODAYS UPDATE

  • China buying Ukraine corn & Brazil beans

  • What price path could corn take?

  • Why we see higher corn acres

  • Soil moisture in US & Brazil is lacking

  • Fast planting effects

  • Possible negative from USDA beans

  • StatsCan

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Sebastian Frost
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