TFM Perspective 3-13-20



The March Supply and Demand report published this past week had little impact, as futures prices barely moved after its release. Shortly after reports are released, price volatility usually picks up with prices moving swiftly, sometime limit (the most prices can move in one day). The March report was a dud, as it appears the USDA may have kicked the can down the road until next month, where more will be known regarding South American weather, energy prices, and the impact of coronavirus. Not only has the virus spread worldwide, real fear hit the equity markets, with stocks crashing this past week. No one can know the true impact to commodities, at least not at this time. The USDA probably did the marketplace a favor by not making significant changes.

A quick summary of the report indicated the Brazilian bean crop was upgraded to a record estimate of 126 million metric tons versus the February estimate of 125 million. The Brazilian corn crop is estimated at 101 million metric tons, in line with the February estimate. Argentina’s corn crop is estimated at 50 million metric tons, unchanged from February. Argentine’s projected bean crop grew 1.85% from 54 to 55 million tons. In the U.S., corn carryout at 1.892 billion bushels was unchanged, while soybean ending stocks increased from 424 to 425 million bushels. Wheat carryout was unchanged at 940 million bushels.

World supplies changed little, as well. Projected corn world carryout was 297.3 million metric tons, slightly above the February estimate of 296.8. Soybean projected carryout at 102.4 million metric tons was larger than the February estimate of 98.9, and perhaps the only number from the report that had a negative tone. World wheat supplies at 287 million metric tons were considered neutral, down slightly from the February estimate of 288 million.

A trade deal with China was struck in January, yet news regarding Chinese purchases has been mixed. Recent tariff exemptions suggest China is paving the way to import U.S. products, yet to date, sales have been lagging. In fact, February soybean sales were record slow, suggesting the USDA may lower forecasted exports in the future. Yet, it’s early enough in the marketing year and growing season that future reports will incorporate changes, some likely very impactful. Expect bigger changes in April and subsequent months, as the USDA winds its way through acreage estimates, weather, and crop ratings, not to mention the impact of coronavirus throughout the world.

If you have questions or comments, contact Top Farmer at 1-800-TOP-FARMER extension 129. Ask for Bryan Doherty.

Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.


Kelly Rubisch

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