The highly anticipated March 31st reports from USDA caught some traders leaning the wrong way, and when the numbers were released Tuesday the markets, as they often do with the prospective plantings report, gyrated in the first half hour. From that point on it was a strong sell-off in the corn and wheat markets.
Arlan Suderman at Water Street Solutions explained both the corn and soybean planted acreage figures from USDA were not what most traders expected.
“Not much increase in soybean acres at all and that doesn’t make sense,” he said. “But I want to say these are the numbers the trade is going to trade. We can argue about the numbers but they are the numbers the trade is going to trade so we need to accept it as that. But soybeans didn’t see the expansion in acreage expected in this survey’s results and corn saw more acreage than expected although still down from year ago levels by about 1.1 ½ million acres or so.”
With unexpected numbers traders started making adjustments.
“Traders who had been leaning long corn, short soybeans were leaning the wrong direction, so their initial reaction has been to unwind those spreads and that’s created those double digit losses in corn while we see gains in soybeans, even though longer term soybean fundamentals are still more bearish than are corn.”
USDA expects corn to be planted to 89.199 million acres, and soybeans are pegged at 84.635 million acres. The corn market was also pressured by a bearish quarterly stocks report, 7.745 billion bushels vs. the average trade guess of 7.609. Reported soybean stocks were 1.334 billion bushels, near what analysts expected.
The figures from Water Street Solutions:
|USDA March 31 Acreage||2015-16|
|Corn||Soybeans||All Wheat||Winter Wheat||Spring Wheat||Durum|
|millions of acres|
|USDA March 1 Survey Results||89.199||84.635||55.367||40.751||12.969||1.647|
|Average Trade Estimate||88.731||85.919||55.796||40.727||13.334||1.759|
|Highest Trade Estimate||89.700||88.000||56.800||42.000||14.503||2.202|
|Lowest Trade Estimate||87.000||83.100||54.950||40.425||12.500||1.400|
|USDA Previous Year||90.597||83.701||56.822||42.399||13.025||1.398|
|Water Street Solutions||88.900||86.800||55.753||40.673||13.350||1.730|
|billions of bushels|
|USDA March 1 Estimates||1.124||7.745||1.334|
|Average Trade Estimate||1.140||7.609||1.346|
|Highest Trade Estimate||1.200||7.800||1.404|
|Lowest Trade Estimate||1.083||7.459||1.273|
|USDA Previous Year||1.057||7.008||0.994|
|Water Street Solutions||1.163||7.459||1.304|