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USDA report surprises

Wheat Spring wheat acreage is projected to be 12.6 million acres, up 15 percent from last year and well above pre-report estimates. The average trade guess for spring wheat acres was 11.5 million acres with the high of 11.92 million and the low o...

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Erin Brown/Grand Vale Creative

Wheat

Spring wheat acreage is projected to be 12.6 million acres, up 15 percent from last year and well above pre-report estimates. The average trade guess for spring wheat acres was 11.5 million acres with the high of 11.92 million and the low of 10.9 million. This compares to 11.009 million planted in 2017. Durum acreage is expected at 2 million, down 13 percent from last year. The average guess for durum was 2.384 million which is in line with 2.307 million planted in 2017.
Winter wheat acreage was increased slightly from the February report at 32.7 million acres. Average guesses for winter wheat are 32.516 million with a high of 32.7 and a low of 31.5 compared to the U.S. Department of Agriculture's February estimate of 32.608 million acres. If realized, this will be the second lowest winter wheat acreage on record. Combined, the all-wheat acreage number is projected at 47.3 million, up 3 percent from last year. The average guess was 46.297 million, with a high of 47.2 and a low of 43.9 million acres.

USDA estimates all wheat stocks as of March 1 at 1.49 billion bushels, down 10 percent from last year. For this marketing quarter, USDA estimates wheat disappearance at 379 million bushels, down 10 percent from last year. Of total stocks, 259 million were stored on farm, down 26 percent from last year and 1.24 billion bushels were off farm, down 6 percent since last year.

Crop condition ratings released March 26 showed a 2 percent improvement in Kansas winter wheat ratings to 13 percent good to excellent. Fair increased 4 percent to 38 percent and poor to very poor decreased 6 percent to 49 percent. Oklahoma saw the greatest improvement at 4 percent in good to excellent to 9 percent. Fair ratings increased 8 points to 37 percent and poor to very poor declined 12 percent to 54 percent. Texas ratings went better and worse with 2 percent increase in the good to excellent to 12 percent, a 5 percent decrease to 25 percent fair and an increase of 3 percent to 63 percent poor to very poor.

Weekly export sales for all wheat totaled 17.5 million bushels with 13 million bushels for the 2017-18 marketing year. This puts total marketing year sales at 838.1 million bushels, 13 percent below the previous marketing year. Marketing year shipments total 678 million bushels, 9 percent below the previous year.

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Corn

The corn market mulled around most of the week but received a good shot in the arm when USDA estimated U.S. corn acreage to be 88 million for 2018. Decreases of 300,000 or more are expected in Kansas, Minnesota and North Dakota. The average trade guess was 89.42 million acres with a high of 91 million and a low of 87.55 million. This compares to the USDA outlook forum's estimate of 90 million and 2017 acreage of 90.167 million.

Corn stocks as of March 1 were a record 8.89 billion bushels, up 3 percent from last year. This compares to the average trade guess of 8.713 billion bushels. Of the total stocks, 5 billion were on farm, up 2 percent from last year, and 3.89 billion were stored off farm, up 5 percent from last year. For the last quarter, USDA estimated corn disappearance from December 2017 through February 2018. USDA estimates corn disappearance for the same period at 3.68 billion bushels, down 2 percent from the same period last year.

Ethanol production for the week ending March 23 averaged 1.039 million barrels per day. This is down 0.95 percent versus last week and down 1.42 percent versus last year. Stocks as of March 23 were 22.79 million barrels. This is down 4.07 percent versus last week and down 2.01 percent versus last year. Corn used in last week's production is estimated at 108.07 million bushels bringing cumulative corn usage for this crop year to 3.26 billion bushels.

Crude oil stocks were higher than expected at 429.95 million barrels as of March 23. Gasoline stocks declined more than expected at 239.59 million barrels and distillate stocks declined slightly more than expected to 128.95 million barrels. Weekly gasoline demand remains at the higher end of the most recent five-year average. Crude oil futures initially were $1.30 per barrel lower on this news but recovered for 50 cent losses during the afternoon.

Weekly export sales totaled 1,640,100 metric tons with 1,353,100 metric tons for 2017-18. Total marketing year shipments total 904 million bushels, which is 25 percent less than last year but overall the numbers continue to improve.

Soybeans

Soybeans saw a nice boost on March 29 as the USDA gave trade a welcome surprise. Soybeans traded softer leading into the report as traders were anticipating more soybean acres in the U.S. acreage and stock report that came out on March 29 at 11 a.m.

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The USDA is projecting that 89 million acres of soybeans will be planted for the 2018 season, 1 million less than they projected in the February ag forum meetings. Corn did not buy back acres with the early spring rally as the USDA is only projecting 88 million acres will be planted this coming year. Spring wheat took back 1.5 million acres and cotton area is increasing 1 million acres. The majority of analysts were estimating soybean acres to be over 90 million acres due to favorable prices. Average trade estimates had soybean acres coming in at 91.05 million planted acres, which would have been a new record. Estimates ranged from 89.9 million to 92.6 million acres. If realized, this would be the first time since 1983 that soybean acres exceed corn acres.

March 1 stock numbers did get raised in this report due to lower export demand. The USDA estimates 2.11 billion bushels of soybean stocks. Analysts were expecting stocks to come in at 2 billion bushels. This compares to 1.74 billion bushels on March 1, 2017. Between December 2017 and February 2018, disappearance was only 1.05 billion bushels, down 9 percent from the same time period last year.

While Argentina has had a production problem, Brazil has had good weather and an above average crop that is making up for part of the Argentine losses. Agroconsult raised the estimate for Brazil's soybean crop to 118.9 million metric tons, which if realized would be a new record high. This is up 1.4 million metric tons from their prior forecast.

South American weather is forecast to remain the same this coming week as the past few months, with above normal temperatures and below normal precipitation in Argentina and below normal temperatures and above normal precipitation in Brazil.  That will change in the 8-14 day forecast, with Argentina getting rainfall chances in that period. Brazil remains cool and wet.

There were new soybean export sales announced by the USDA on their daily wire this past week, which is always welcome news for this time of year. This was much needed as the last weekly export data was once again disappointing.

Weekly export sales of soybeans showed a total of 14.2 million bushels, with the majority for the 2017-18 marketing year. This put total marketing year sales at 1.85 billion bushels, 8 percent less than the previous marketing year.

The funds continue to carry a heavy net position leading into our spring planting time frame. Commodity Futures Trading Commission data on March 20 showed the funds slightly decreasing their strong net long stance, moving from net long 208,000 contracts to net long 196,000 contracts.

For the week ending March 28, May soybeans were down 10.25 cents, July 2017 soybeans were down 10.5 cents and November soybeans were down 10 cents. Soybeans made back these losses plus some after the USDA lowered soybean acres in their report. After the report came out at 11 a.m. on March 29, soybeans were up 25 to 30 cents.

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Canola

For the week ending March 28, May canola futures in Winnipeg were up $1.20 Canadian at $521.80 Canadian per metric ton. The Canadian dollar was up .0019 to .7741. This brings the U.S. price to $18.32 per hundredweight.

• Velva, N.D., $18.13 per hundredweight, September at $17.23.

• Enderlin, N.D., $18.69 per hundredweight, September at $17.75.

• Hallock, Minn., $18.09 per hundredweight, September at $17.47.

• Fargo, N.D., $19.00 per hundredweight, September at $17.85.

The Canadian Dollar has found support recently in the $76.50 range.

Barley

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Cash feed barley bids in Minneapolis were at $2.85, while malting barley received no quote. The Berthold, N.D., bid is $2.60 and CHS Southwest New Salem, N.D., bid is $2.90.

Durum

Cash bids for milling quality durum are $6 in Berthold and at $5.75 in Dickinson, N.D.

Sunflower

Cash sunflower bids in Fargo were at $17.65 and October at $18.55. For the week ending March 28, soybean oil was down $1.76 at $31.62 on the May contract.

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