Chicago Board of Trade Market News
Outlook: Price action is anticipated to become more volatile next week as USDA publishes the important Prospective Plantings and Grain Stocks reports at 12:00 noon in Washington D.C. These reports are released each season at the end of March and the resulting price action is commonly aggressive. The price action of the various grain contracts normally move in the same direction but differ in intensity. This season the condition is somewhat unique because the composite of data is anticipated to be supportive for corn contracts and negative for the soy complex. Assuming how pronounced the data is to one extent or another, the prospect is for increased price volatility as it is virtually impossible for either these two crops to be entirely decoupled from the influence of the other during planting season.
Chicago futures contracts often react in accordance with the extent that the actual data released by USDA deviates from the average expectations of surveyed analysts. Dow Jones conducted a survey that shows the average estimate for U.S. corn acreage is 88.684 million acres (range 87-89.7). That is an expected decline of 1.9 million U.S. corn acres from last season’s 90.6 million acres. In conjunction, the total amount of U.S. corn stocks available on March 1 is estimated to be 7.628 billion bushels. That is 620 million bushels above last year’s level on March 1 of 7.008 billion bushels.
The average estimate for U.S. soybean acreage is 85.872 million acres (range 83-87.5). That is an expected increase of 2.17 million U.S. soybean acres from last season’s 83.7 million acres. In conjunction, the total amount of U.S. soybean stocks available on March 1 is estimated to be 1.341 billion bushels. That is 347 million bushels above last year’s level on March 1 of .994 billion bushels.
Either corn or soybeans is likely to assume the role of price leadership directly after the report, with the other and wheat assuming more passive roles. However, a consensus seems to be that corn at some point will assume the leadership role between the end of March and the first of June. Consequently, the release of bullish corn data on Tuesday is expected to result in corn contracts being bought sooner and if more bearish soybean data temporarily assumes the leadership role, then the anticipated result is that corn contracts will be bought later. Either way, the outlook is that there will be no substantial price weakness in corn contracts prior to the first of June.