U.S. dollar now trading at the highest level in the past seven months on stronger-than-expected U.S. employment data. Could provide some additional commodity headwinds. USDA's WASDE report is the focus of the trade. In a nutshell somewhat disappointing for soybeans; mixed for corn; and disappointing for wheat. Below are a few quick highlights along with specific numbers and estimates. Here are some highlights:
- U.S. corn ending stocks unchanged
- Corn exports dropped to 825 million bushels compared to 900 million last month.
- NASS raised corn imports by 25 million.
- On the flip side, the USDA raised the demand side of the equation by the same amount (100 million bushels) by pushing livestock feed to 4.55 billion bushels, up from the February forecast of 4.45 billion bushels.
- U.S. ending stocks unchanged
- World soybeans ending stocks bumped a hair higher to 60.2 million tons vs. 60.1 million
- U.S. ending stocks bumped higher from 691 to 716.
- The export forecast was revised down by 25 million bushels to 1.025 billion bushels.
- World wheat production bumped higher from 653.6 million up to 655.5 million.
- World wheat ending stocks pushed higher, as well, from 176.7 mmt to 178.2 mmt.
- Argentine soy lowered from 53 mmt to 51.5 mmt.
- Argentine corn also lowered from 27.0 mmt down to 26.5 mmt.
- Brazil production was left unchanged.
Outside macro traders are digesting this morning’s STRONG U.S. monthly employment numbers. Remember, U.S. employment data is becoming increasingly more important since U.S. federal monetary policy is now being guided by it. Most traders were looking for a +160,000 job increase and the numbers showed a jump of +236,000 jobs. This is a huge jump over January's gain of +157,000 jobs. The average monthly increase the past six-months has been around +177,000. Another huge positive was the fact the monthly unemployment rate pushed to new four-year lows at 7.7%. The only concern is that we just took one big step closer to the U.S. Fed phasing out quantitative easing.
Off the Cuff: What is moving today's market
There is talk in the trade that the USDA may be vastly underestimating the the size of the Chinese hog herd. The USDA office in Beijing is saying the Chinese hog herd could be 8 million head larger than the USDA is currently thinking. Thoughts are by year end they will have over 475 million head. The herd has been increasing much quicker than originally thought because of better disease control practices and a government sow subsidy. The outcome could be fewer pork imports for China but much higher feed grain imports. Just this week Glencore stated that China's big herd had grown to an extent that it might require an additional 160 million tons of corn for feed.
There is talk inside Argentina that soybean exports just two to three weeks away from delivery. Even more talk that Argentine soymeal could quickly find its way into the U.S. by mid- to late April. Prices are still aways off, but it shouldn't take long for them to start penciling. Sounds nuts, but there is even talk we might import some bean oil. Concern for the bulls is that this could ultimately solve the tight U.S. balance sheet.
Brazilian port workers unions threaten to strike at 36 Brazilian ports on March 19, even though the unions and government are still in negotiations. Also hearing there is a 35-40-mile line of trucks now waiting to unload soybeans at Mato Grosso. Truck drivers are complaining about waiting two to three days out on the highway before even entering the terminal.
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