Friday was a big day. Friday, March 29, held two of the most watched, anticipated, and important reports that the U.S. Department of Agriculture release every year.
The first is the Quarterly Grain Stocks Report, which shows supplies on hand in the U.S. for major crops. This is an actual total, not an estimate put out by a research team, bringing in all aspects of demand such as feed, exports, biofuels, etc. This March report is critical coming out of the winter when a lot of feed is consumed and the market is searching for accurate readings on supply heading into the new crop year.
The second critical report is more forward looking: the Prospective Plantings Report. This gives results by crop and by state for planting intentions for the coming crop year. Data is based on surveys of farmers and gives the first look at what to expect for the season ahead. Given the unique trading situation that the U.S. finds itself in (compared to other years), soybean stocks are huge, and the expectation was for more area to go to corn than soybeans. On top of that, flooding in the last month through the central U.S. could shift farmers' plans, as some crops just might not be possible. Additionally, large wheat stocks and a tough fall weather pattern was expected to reduce wheat area.
With all of that, will the market be more interested in the stocks report and shrug off the acreage data? Look for June's planting report to give an update on what actually transpires between intentions and reality.
Wheat prices had been rising from the lows as fund buying and short covering had supported the markets off of recent lows. That trend shifted this week. Prices were already working lower from mid-week, but the U.S. Department of Agriculture reports finished the decline off on Friday. First, the stocks report showed 1.59 billion bushels of wheat compared to an expectation of 1.56 billion bushels. Corn stocks were also greater than expected, coming in 260 million bushels above pre-report estimates.
Wheat area will be down (again), falling to its lowest point on record. Total area is set to decline to 45.8 million acres. This is a 2 million acre drop (4 percent) from 2018 total wheat area. The market knew that winter area was down, but spring and durum were reduced as well.
Durum planted area is set to fall significantly in the U.S. in 2019. The U.S. Department of Agriculture reported that just 1.4 million acres will go to durum wheat compared to 2.1 million acres a year ago. Pre-report estimates also expected 2.1 million acres, so traders were surprised by the 31 percent drop. Farmers are simply tired of the low pricing for durum and many are choosing to avoid planting the crop altogether.
The canola market was toying with making new lows before finding some support late in the week. Lack of Chinese demand is really pressuring the market as large stock levels weigh on prices. The impact of the loss of sales is significant (down roughly 19 percent). Support was simply some bargain buying and does not suggest an overall change in market direction.
Barley planted area in the U.S. is expected to increase modestly from a year ago. Planted area in 2019 is set to climb to 2.55 million acres from 2.54 million a year ago. Barley stocks are a little bit tighter than a year ago, totaling 121.3 million bushels versus 130 million in 2018.
Canadian mustard seed export activity has been strong to start the year. Shipments are up 2 percent from the previous month and up 7 percent from a year ago.