Grains –
We have Conab out this morning, and I’ll update those numbers in a separate email this morning. The other focus today will be WASDE later this morning, and today we’ll run through a quick look of potential changes. That said, I honestly am not expecting a lot of action from WASDE today so there really isn’t much to say…
Wheat
I expect basically no change to the US balance sheet today. Some will argue that WASDE over-reached with their export increase last month, but I view it as highly unlikely that they’d reverse course after just one month. Additionally, we seem to be on a decent pace to hit their projection so I’m personally not going to cast stones at it right now. Other demand line items can await the inventory figure due at the end of this month for revisions. The average guess for carryout is basically unchanged from last month’s figure, so it seems most agree there should be virtually no change.
In the world production figures, I suppose we could see a further increase in Australia’s crop following the revision from ABARES. Argentina’s Ag Ministry also increased their crop projection so I suppose that is an area to watch today. Overall no big changes are expected, but on balance the world carryout projection should move a smidge higher, which is reflected in the average guess.
Corn
Again I am looking for very little change. F&R will likely be left alone as WASDE can wait for the stocks figure at the end of the month to base changes. That said, many are arguing that the ethanol grind should again be raised this month, and if WASDE does raise the ethanol grind they might decide to cut F&R a smidge as an offset.
If you recall, earlier this week I made the point that it is highly likely the final ethanol grind for this year will prove to be higher than the current projection but it is not so obvious that WASDE must act now. I somewhat feel WASDE will be inclined to sit and wait this month to be allowed to make adjustments everywhere following the inventory data at the end of this month. The same case can be made for exports. With that in mind, I favor leaving the balance sheet completely untouched this month, and the average guess would appear to be in agreement. That said, the risk for demand today would be higher, not lower, thus the greater risk for a slightly smaller than expected carryout.
Keep in mind WASDE will need to change their 16/17 corn for ethanol grind, as discussed previously. It shouldn’t change their carryout, however.
I can’t think of big changes in the world balance sheet forthcoming. Obviously the focus will be on South American crops, but it’s still very early in the game so I don’t anticipate major changes. I would lean towards a larger Brazilian crop, but I don’t expect that to show up in world export numbers until the 17/18 balance sheet rolls around.
Soybeans
Again, I’m not looking for much change here. As noted yesterday, I think considering the likely size of South American crops there is some potential downside to the export figure. Still, the guys at WASDE are human and they know they’ve been criticized for being too small on soybean demand consistently. They’ll likely wait and see here. MYTD crush numbers appear to be on a pretty solid pace to match the current WASDE projection, so I don’t anticipate a change there either. Seed demand will remain unchanged until after the Mar 31 report.
With no change to the crush figure expected, it should go without saying that changes to the produce balance sheets should be fairly minor as well. As pointed out before, biodiesel consumption of soyoil appears to be starting off the New Year on a slow note and that is something to watch going forward, but I don’t expect a change here today.
The obvious main focus today will be South American production estimates. Conab will be the focus this morning, of course. I do think the difference in average guesses is worth pointing out. The survey for the WASDE guess was done last week, and the average guess calls for 106 mmt. The survey for the Conab report was done this week, and the average guess calls for 107 mmt. I think this says less about the difference between the two groups and more about the consensus thought on production continually growing right now. I think it is interesting that the average guess calls for a slight reduction the Argentine crop. I’d bet that WASDE sits unchanged for now.
Export sales will also be released this morning but I don’t feel this will be very market-moving. Sales last week appear to have been fairly quiet.
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