A lot to unpack from Friday's USDA reports
The U.S. Department of Agriculture had some catching up to do after the government shutdown. There have been a slew of reports coming out over the last week after the reopening of the government allowed for data collection and report preparations. On Friday, some of the key information that the agriculture markets had been waiting for finally came out, and though the market's response was relatively muted, there is a lot of information that had to be digested in a short amount of time.
The first report to pay attention to was the U.S. winter wheat seedings area information. This was of particular interest because of the wet end of planting season in the Central Plains. A dip from a year ago was anticipated, but the extent was not known. In 2018, 32.5 million acres were planted, and Friday's report showed a small dip to 31.3 million acres for the 2019/20 crop. This was slightly below expectations, but the market was not supported in a big way. Part of that was because the next report on quarterly stock levels, where wheat supplies exceeded market expectations.
On the flip side, both corn and soybean stocks were below expected (though still quite large from a historical perspective). Finally, the monthly supply and demand estimates shed some light on the USDA's view of the current crop year, which was not far out of line with pre-report expectations.
Wheat prices are still within the established, technical trading range. Prices just have not been able to break one way or the other. As of this writing, prices are on the low end of the range, pressured by export news showing larger French exports to Egypt. This is bearish for U.S. prices as the expectation during the shutdown was that export business should be shifting to the U.S. given price competitiveness abroad. Russian domestic prices are high and supplies are tight, so demand is going somewhere else. Many believed it would be to the U.S., but as backlogged export data has become available this week, it is clear that not all of the sales expected to return to the U.S. have come here.
As mentioned previously, the winter wheat planted area was below the market's expectations, but the price response was clearly based on the export data and comfortable stock levels and not the acreage report for winter wheat plantings.
Durum prices remain at very low levels, with nothing exciting to report in the USDA data, unfortunately. Prices are holding steady, as is the U.S. durum balance sheet, with stocks unchanged from the December report at 45 million bushels.
The canola market was pressured this week, despite ongoing strength for the soybean oil market. Prices are correcting with the possibility of a U.S. and China trade deal that would steal some demand back from Canada for canola.
Peas and lentils
In the U.S., pea harvest for the 2018-19 crop increased 12 percent from a year ago to total 722.5 thousand metric tons, according to USDA's report. U.S. lentil output was up a similar 12 percent, reaching 381,000 metric tons. The impact of the government shutdown is still being felt, as export data for both the U.S. and Canada has been delayed, with the December 2018 data set to be released March 6.
U.S. mustard seed output increased from 2017 by 24 percent. Total production swelled to 73.1 million pounds.
The U.S. barley balance sheet saw a modest increase in ending stock levels, increasing to 93 million bushels for the 2018-19 crop year. This is a 10 million bushel increase from the December report and can be attributed to lower domestic usage for feed.