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March 2017 USDA Supply & Demand Review

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SOYBEANS

The USDA Supply/demand report for soybeans was considered slightly bearish as ending stocks came in at 435 million bushels compared to the average estimate of 418 million bushels. The range of estimates was 400 to 444 million bushels and compared to February’s 420 million bushels. While crush was revised up by 10 million bushels, exports were revised down by 25 million bushels as the jump in Brazil production is expected to slow interest in US soybeans. World ending stocks came in at 82.82 million tonnes versus the average estimate of 81.52 mmt. The range of estimates was 80.44 to 83.0 million tonnes and February’s 80.38 million tonnes. The Brazilian soybean production was 108 million tonnes compared to the average estimate of 106.0 mmt (104.0-109.0 range). The Argentine soybean production was 55.5 million tonnes versus the average estimate of 55.2 million tonnes (54.0-56.0 range). China imports were revised up by 1 mmt to 87 million.

PRICE OUTLOOK:  Higher than expected South America production helped to trigger the drop in US exports to push US ending stocks up. World ending stocks are also burdensome. The next downside targets for May soybeans are at 1002 and 994 3/4 with close-in resistance at the 1017-1021 zone.

CORN

The USDA Supply/demand report for corn was considered neutral to slightly bearish versus trade expectations as March ending stocks came in at 2.320 billion bushels versus trade expectations of 2.317 billion bushels. The range of estimates was 2.245 to 2.385 billion bushels and compared to February’s 2.320 billion bushels. US feed use was lowered by 50 million bushels offset by an increase in ethanol usage of 50 million bushels. Exports were left unchanged at 2.225 billion bushels. World corn ending stocks came in at 220.7 million tonnes compared to the average estimate of 218.51 million tonnes. The range of estimates was 217.0 to 223.1 million tonnes and compared to February’s 217.56 million tonnes. The Brazilian corn production was estimated at 91.5 million tonnes versus the average estimate of 87.78 million tonnes (range 86.0-91.5). Argentine corn production was estimated at 37.50 million tonnes compared to the average estimate of 36.46 million tonnes (range 35.0-37.0).

PRICE OUTLOOK: The report is somewhat bearish as world production numbers are larger with Brazil’s production up 5.0 million tonnes from February’s estimate and Argentina is up 1.0 million tonnes. The market is already down 13 cents from this week’s high. Look for support at 360 to 365 in the May contract with resistance at 372 3/4.

WHEAT

The USDA supply/demand report for wheat was considered neutral as March ending stocks came in at 1.129 billion bushels compared to the average estimate of 1.135 billion bushels. The range of estimates was 1.050 to 1.164 billion bushels and compared to February’s 1.139 billion bushels. Imports were revised down by 10 million. World wheat ending stocks were estimated at 249.94 million tonnes versus the average estimate of 248.62 million tonnes (246.0-250.0 range) and February’s 248.61 million tonnes. Argentina production was revised up by 1 mmt and Australia up by 2 million. Usage, however, was revised up by near 1 million tonnes.

PRICE OUTLOOK: Given the uncertain weather outlook and the burdensome old crop supply, buyers can concentrate on new crop and sellers on May wheat. July wheat key support levels are at 462 1/2 and 454 1/2. Keep 502 1/2 as upside target.

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