Typically the March report does not show any major changes but sets the market up to start looking at new crop. This year was no exception. They only made very minor changes to the domestic and world balance sheets. On corn, they reduced ethanol usage and exports, on beans, they raised domestic usage a trivial amount and decreased exports on wheat slightly. Glad to have this report behind us now, the market is going to be very much more interested in the planting intentions report at the end of March.
The selloff in the market has been very counterintuitive for the last several weeks. The crops with seemingly best fundamental picture, corn and wheat, have taken the brunt of the beating. While beans have managed to hang on to the old range. We have noted a significant increase in fund selling and we have seen their short position grow significantly in both corn and wheat. This short position could actually be to our benefit later as they have to buy contracts to exit their position and if they got spooked it would add to the upside potential. We know the supply and demand picture did not change so drastically in the last several weeks so there must be something else at work too. Another reason for the weakness could be from significant farmer selling. We never want to price into a falling market but there are significant cash flow needs this time of year to finish up operating notes, prepare for new crop, and pay taxes. We did not feel it nearly as strongly in the corn when the December contracts went into delivery because the soybean tariff money was being paid out. We do not recommend changing objectives at this time.
