Corn
The corn numbers came in neutral which was a disappointment to all who were expecting a good jolt from USDA on this report. Corn yield came in 176.4 which is a bushel below expectations and 2 tenths below last year, but the lower yield was offset in the balance sheet with lower ethanol and feed usage. Even with the lower usage, we are still projected to see a slight drawdown of US stocks from last year. World numbers were slightly above expectations as USDA did not lower the Argentinian estimates as much as many private analysts. Take home from corn here is that we are still seeing a stocks drawdown year over year, if the (hopefully) soon to be coming Chinese trade deal includes corn and/or ethanol it could dramatically tighten up the balance sheet.
Soybeans
Soybean numbers came in very neutral. US yield came in slightly below expectations which brought carryout down a little. This small reduction does little to reduce the 1000 pound Chinese gorilla on our back, and rumors of setbacks in the trade negotiations were the main feature of the selloff yesterday. South American yield was revised slightly lower due to the adverse weather we have been talking about, but due to the increase in acres, production is still up. With this report behind us, market will immediately go back to trading weather and trade talks.
Wheat
Wheat seedings were lower than most anticipated but that was partially offset by the fact USDA left exports unchanged even though many have been reporting that US wheat is competitive in the world market right now. However, a tender by Egypt announced today did not include any US wheat seeming to indicate we are not quite cheap enough to get a major chunk of the export business. However, a lack of acres leaves the market very sensitive to weather this spring and also the possible inclusion of wheat in a deal with China. Much like corn, this report was not the shot in the arm many had hoped for but it was not a big bearish adjustment to crush our hope.
Cotton
USDA lowered cotton yield to 838 pounds down from 860 in December. This was widely expected after all the adverse weather faced at the end of the growing season. This trims the domestic balance sheet a little but similar to beans we still have the Chinese gorilla on our back. We need a trade deal with China to get cotton back on track. The world balance sheet is tight, but the US market will not care until we feel better about exports to China.
