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USDA Reports, More Food for the Bears

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USDA Reports, More Food for the Bears

Ben Kasch

The highly-anticipated USDA March 31st reports are now official. Both the stocks numbers and prospective planted acres for soybeans were bearish for the soybean market Friday. Our Bower Trading Market Strategy report looks at where the market is likely to go from here. The soybean acreage was above trade expectations, while the forecast for planted corn acres was at the low end of expectations. Ben Kasch, with Bower Trading, says most of the shift from corn to soybeans came in fringe states, “In North Dakota, about 150,000 switched from corn to soybeans; in South Dakota, it was about 200,000. Even in Western Corn Belt states, the corn acreage dropped while soybean acreage increased. In Minnesota, the shift was 450,000 and, in Iowa, 600,000.” In Indiana, however, corn planting was pegged at 5.6 million acres, unchanged from last year while Soybeans acres increased to 6 million acres,  up from 5.65.

Kasch says the price outlook for soybeans does not look good, “We are close to the $9.50 on the May contract and that is a major support level. And, if we don’t hold that, we may continue to work lower as short positions begin to pile on.” A combination of large U.S. acreage and large yields estimates from Brazil are fueling the market’s perception that the world has plenty of soybeans.

Bear + A Sinking Stock Chart on white background

Kasch added, as we begin the week, the market will be trying to stabilize and funds will be re-evaluating their positions. The focus will also turn to the weather. Any planting delay will mean a likelihood of even more soybean acres but a hot dry summer could cut corn yields which would be push corn prices higher.

Kasch says the next hope for the bulls will be the April 11 supply and demand report. He noted that record ethanol production and a good place of exports could help reduce carryover numbers despite the higher production figures.

On Friday, soybean stocks were pegged at 1.735 billion bushels and the trade was guessing that would be 1.684 billion. The average of guesses for soybean planted acres was 88.482 million, but the USDA number is 89.482. USDA put corn stocks at 8.616, while the trade expected 8.534. Corn planted acres from USDA are 89.996 million. The trade was looking for 90.969 on average. Both the trade and USDA put spring wheat acres at 11.3 million, and wheat stocks are 1.655 billion bushels, higher than the trade’s guess of 1.627.

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