Trade was surprised by the USDA’s acreage estimates, as for corn and soybeans the totals were well below average expectations. Planted acres for this coming production year are predicted at 91.1 million on corn, 87.6 million on soybeans, and 46.4 million on wheat. These acreage estimates compare to the 90.8 million on corn, 83.1 million soybean, and 44.4 million wheat acres that were planted a year ago. The most attention remains on soybeans, as even if the United States has a trend yield of 50.8 bushels per acre it is unlikely to produce a crop large enough to satisfy demand and allow for a build in reserves. 

Quarterly stocks numbers were closer to trade estimates. As of March 1, the United States reportedly had 7.7 billion (bbu) of corn, 1.56 bbu of soybeans, and 1.31 bbu of wheat in inventory. These totals were all down from March of 2020 when inventory totaled 7.95 bbu on corn, 2.25 bbu of soybeans, and 1.41 bbu of wheat. There is little surprise that the most attention has fallen on soybeans to see if stocks will remain adequate through the end of the marketing year. 

Now that all this data has been released, trade has started to incorporate them into current balance sheets. Not only is this for potential old crop ending stocks, but new crop production and carryout as well. Our next official view of these will come in the April WASDE report, but trade is showing more interest in the May release, as that will give us our first official look at new crop balance sheet projections. 

A factor that is having more of an impact on commodities as well as other markets is the increasing signs of inflation. To see inflation develop when an economy builds is not surprising. This has been most notable in the energy complex with both crude and gasoline values on the rise. While this can cause economic pain for a consumer, it has been welcomed by the renewable fuel industry. Many plants have again been able to post favorable margins following the rise in energy values, as even with higher corn and soybean markets, energies have rallied harder. 

The big question now is if inflation will continue to build and start to slow consumer demand. This could again halt the improvement we have seen in the renewable fuel complex. How much travel we see in the next few months will be a deciding factor in this development. With Covid restrictions being lifted many may opt to travel even if costs are higher. In turn, this will benefit other commodity demand such as in the foodservice industry. 

The recent rise in the US Dollar has garnered considerable market attention recently, but this is reaching past the United States. At the same time the US Dollar has rallied, the Brazilian Real has traded to record lows. This has driven the value of Brazilian soybeans higher as they are based off the US Dollar, not the Real. As a result, Brazilian soybean farmers are making heavy sales to capture as much revenue as possible. This is also likely to encourage farmers to continue to expand plantings if they can keep selling at these levels. 

While much of the interest in the market up to this point has been on exports, more is starting to be placed on domestic usage. Soybean crush has been above expectations for much of the marketing year, but there are thoughts this may start to slow. Many crush plants across the interior market claim they will soon take down-time for annual maintenance, and some may remain off-line until we get closer to the upcoming harvest given the current lack of soybean movement. While this is true for some plants, others are expected to remain in full production to capture as much of the current crush margin as possible. 

We are also seeing differing opinions on the US ethanol industry. Ethanol production has been rebounding in recent weeks but remains well below the production volume of a year ago. Hopes are with the easing of Covid restrictions and the start of the US summer driving season we will see ethanol demand increase and production will rise with it. Even without domestic demand we are seeing record ethanol exports. As with all other commodities this is the result of Chinese demand, who accounted for 85.9 million gallons of the sales. 

Secretary of Ag Vilsack has announced he wishes to expand the US’s Conservation Reserve Program enrollment options to support ag prices. Vilsack claims he wants to work with states to offer higher payments for acres that are enrolled. He also believes this would help fight greenhouse gases. This is being questioned given the need for high US plantings to satisfy demand, especially on soybeans. There are currently 20.7 million acres enrolled in the CRP, well short of the 25-million-acre limit. 

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