Initial Analysis of Stock and Prospective Plantings Reports
Teucrium | March 31, 2021
Corn
Quarterly Stocks Report
Corn stocks reported as of March 1st totaled 7.70 billion bushels, in-line with the average analyst estimate. This suggests that corn usage of 3.59 billion bushels, a 6% increase from one year ago.
Prospective Plantings
Corn planted area for 2021 is estimated at 91.1 million acres, 2 million less than the average analyst surveyed by Bloomberg but only fractionally lower than estimates from the USDA February Outlook Forum. Corn plantings of 91.1 million acres suggests that the US corn balance sheet will likely remain tight, and perhaps become even tighter.
Soybeans
Quarterly Stocks Report
Soybean stocks reported as of March 1st totaled 1.56 billion bushels, a 31% decline versus the same period one year ago. This figure is slightly higher versus the average analyst surveyed by Bloomberg. However, the USDA notes that the disappearance (i.e. the difference in quarterly stocks) is up 39% versus last year.
Prospective Plantings
Soybean planted area for 2021 is estimated at 87.6 million acres, well below the average analyst estimate of 90.1 million acres. This figure is even below the lowest analyst estimate of 88.9 million acres. Given these acreage estimates it is highly likely that the US soybean balance sheet will continue to tighten over the ’21-’22 crop year.
Wheat
Quarterly Stocks Report
Wheat stocks reported as of March 1st totaled 1.31 billion bushels, slightly above the above the average analyst estimate. According to the USDA, the indicated disappearance for the quarter is 9 percent lower versus the same period last year.
Prospective Plantings
Wheat planted area for 2021 is estimated at 46.4 million acres which matches the highest analyst estimate from those surveyed by Bloomberg and is 5% higher than one year ago. The USDA notes that this would be the 4th lowest wheat planted area since records began in 1919. Still, this acreage number suggest that wheat ending stocks are likely to increase year over year.
Market Reaction
As of this writing, the next seven contract months for corn and soybean futures are locked limit up.[1] In the wake of the reports it appears that the trade is likely pricing in the expectation for tighter corn and soybean balance sheets moving forward. Wheat prices are also advancing and are likely being pulled higher by the action in corn and soybeans given that the reports were not particularly bullish for wheat.
[1] The limit, set by the exchange, is the maximum price move that a futures contract can make during a single session. A Lock limit occurs when the bid/ask of a futures contract moves beyond its daily allowable limit. Trading cannot occur beyond the limit price for the duration of the session. Lock limits can be either up or down.