Market Analysis

Each spring, the USDA surveys U.S. producers to get an initial sense of their prospective planting ideas for the upcoming year. The results of this sampling will be released on March 29 along with a quarterly stocks report for the major row crops. Because of last fall’s sizable supplies and generally low prices, both domestic and overseas buyers didn’t have enthusiasm for ownership until Argentina’s drought began 9-10 weeks ago. The upcoming stock reports won’t show South America’s drought impact until later in the year. The trade’s focus will be on 2018 US planting prospects and how that may shift various crops price potential in the midst of a potential trade war between the US and China.

Low grain prices last fall kept US winter wheat seed-ings near last year and 1909 levels at 32.61 million acres. S. American weather problems have strengthened protein and fiber prices more than corn over the winter period. This will likely reduce this feed grains area from last year. After 2016’s 6 million jump in corn acres (mostly west of the Mississippi River), and 3.84 million decline last year, stronger competing prices and reduced financial backing have the trade expecting a 750,000 decline to 89.42 million acres. However, strong cotton prices attracting acres across the South, drought in the SW and firmer spring/durum prices in N. Plains has us expecting a further cutback in corn to 88.55 million acres. Interestingly, March plantings have been mixed and with-in 1 million acres of the trade in 8 out of last 10 years.

After last year’s dramatic 6.7 million jump in US soybean plantings, an initial setback in 2018 seedings was anticipated. However, Argentina’s drought and soybean’s lower variable cost of planting has us and the trade expecting 900,000 rise in acres to 91.05 million. Historically, except for last year, the USDA’s March seedings have been lower 7 out last 8 years than the trade.