March Crop Production report brings surprises

Weather conditions improve in the U.S. southern Plains, while they continue to deteriorate in Argentina.

Mature corn
Corn continues to be the market caught in the middle, according to Randy Martinson. It has enough planned acreage to sit back and see what direction the market is headed.
Agweek file photo

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Pressure continues to push the grains lower, even with some friendly news filtering in to help give traders a little support.
The biggest issue continues to be demand as high prices have definitely served the purpose. You know the saying; high prices cure high prices. That has not been an issue the past week as the grains have come under heavy selling pressure. As of February 21, May Minneapolis wheat has traded lower 10 out of 11 sessions losing 80 cents. May Chicago wheat has traded lower 12 out of 15 sessions since February 14 losing $1.0925. May Kansas City wheat traded lower 9 out of 11 sessions since February 21, losing 93.25 cents. May corn has lost ground 8 out of 10 sessions since February 22 losing 48.75 cents. May soybeans have been the best performers, trading lower 5 out of 10 session since February 22 losing only 17 cents. Wheat and corn have been under heavy pressure since the Ag Outlook Forum was released. Improving weather conditions in the U.S. southern Plains as well as expectations of higher acreage in 2023 has kept a lid on any potential rally.

Soybeans have been under pressure from expectations that Brazil will be taking over as the lead soybean exporter in the short term. That has also been evident in the sharp increase in basis levels in the northern Plains. But selling was also tied to rumors of Chinese cancellations. There was confirmation China switched some soybean purchases from Argentina to Brazil.

Corn was pressured by StoneX’s production estimate for Brazil corn. Their latest estimate has corn production at 130.6 million metric tons versus USDA’s 125 million metric tons estimate and Agroconsult’s estimate of 128.5 million metric tons. It seems a bit unreasonable to project that big of an increase in corn production in Brazil, especially with the delayed planting and fact that 52% of the country’s corn will be planted after the ideal planting window.

Buenos Aires Grains Exchange (BAGE) lowered their crop ratings for Argentina. Argentina’s corn is now rated 6% good/excellent, down 3% from last week and 56% poor up 5% from last week. Soybeans are rated 2% good/excellent, down 1% and 67% poor, up 7% from last week. It is likely production estimates for Argentina will decline again next week. With soybeans production estimates now approaching the 30 million metric tons level, it is not unreasonable to see Argentina’s soybean production break into the upper 20 million metric tons range. That would also make it more difficult for Brazil’s record production to make up for Argentina’s short fall. Last year’s combined South American soybean production was at 173.4 million metric tons (Brazil at 129.5 and Argentina at 43.9).


According to USDA’s March Crop Production report, the combined South American soybean production is now estimated at 186 million metric tons, 12.6 million metric tons above last year.

Datagro has also released updated production estimates. They are estimating Brazil’s corn at 128.6 million metric tons versus 127.9 million metric tons previously. For Brazil’s soybeans they are at 150.8 million metric tons versus 152.1 million metric tons previously.

Negotiations continue on extending the Black Sea Export Initiative. At this point, Russia is holding fast to their demands to relax sanctions on them, with the biggest being allowing Russia to export fertilizer. Ukraine would like to see the extension for a year and to include a few more ports. It seems at this point Russia is in favor of not allowing the agreement to continue. The current agreement ends March 18.

Corn continues to be the market caught in the middle. Corn seems to be comfortable with the Ag Outlook Forum numbers and just seems to be the market that is sitting back while wheat and soybeans need to attract acreage. Corn is being planted as we speak in Texas, with 20% planted. Rumors of China buying corn due to concerns toward the second corn crop Brazil are growing. So far there has been no confirmation of the sales, but most believe a U.S. Chinese company has bought the corn, which means it doesn’t need to be reported until it enters the ports for shipment.

Argentina’s weather conditions remain friendly as most regions reported temps as high as 104 F the previous week. And with no rains, most are expecting the corn and soybeans crop in Argentina to decline further. Toss in Dr. Michael Cordonnier’s lower soybean production estimate, which dropped 1 million metric tons to 31 million metric tons, and you have another reason for traders to push U.S. soybean higher in an attempt to buy acreage away from corn.

Wheat and corn struggled early in the week with wheat collapsing back to new lows.

The selling in wheat proved to be too much for corn to overcome, even with two confirmed export sales being announced. Corn has the acreage, according to the Ag Outlook Forum, so corn can sit back and watch.

Wheat and soybeans on the other hand are seeing the need to buy acreage, at least soybean does. Wheat was under pressure from poor export demand. Traders are also expecting to see improvement in last Monday’s Weekly Crop Progress report. The opposite happened as conditions continue to be variable.


As of March 5, Kansas’s winter wheat crop was rated 17% good/excellent, down 2% from last week. Oklahoma’s winter wheat crop was rated 39% good/excellent, up 3% from last week. Texas’s winter wheat crop was unchanged at 19% good/excellent. The crop is 19% headed in Texas versus 17% last week and 10% average.

Selling pressure this week was also tied to Federal Reserve Chairman Jerome Powell’s speech in front of Congress. In the speech, Powell stated that inflation has not declined as much as hoped and that it will likely take substantial rate hikes to get inflation under control. The expectations that rates are going to continue to increase sent the Dow down hard along with crude oil (down $3) and gold (down $36.50) and the dollar sharply higher (over 1.3 cents higher). At this point most are now in the camp that the Fed will increase rates 0.5% next week. This spilled over to put pressure on the grains late in the session as well.

On Wednesday, USDA released their March Crop Production report . The report was neutral to wheat as USDA made no adjustments to wheat’s supply and demand numbers. The report was negative corn. In the report, USDA lowered corn exports 75 million bushels, which followed throughout to increase stocks by that much. The report was friendly soybeans as surprisingly, USDA increased exports (but also lowered crush). Stocks were lower than expected for soybeans.

Contract highs for cattle

Cattle continued to forge ahead, posting new contract highs in both markets. Cattle struggled slightly after the Fed chairman’s comments, but found support from tight supplies, a lower production estimate and lower grain complex. Gains were kept in check by economic concerns.

“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”

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