Free Commentary

By: Dan Hueber –

Expectations were turned into reality yesterday as the USDA issued the February supply/demand reports without any major surprises either bullish or bearish.  I see the highlights as such; Domestic wheat ending stocks we trimmed 47 million bushels or 4% taking them down to 1.139 billion.  Corn ending stocks we reduced 35 million bushels or 1.5% projecting them to come in around 2.320 billion.  Soybeans ending stocks were left unchanged.  On the world stage, wheat ending stocks were lowered 4.68 MMT or 1.8% to 248.61 MMT.  Corn was reduced by 3.42 MMT or 1.5% to 217.56 MMT and finally soybeans which were dropped 1.94 MMT or 2.35% to 80.38 MMT.  While we recognize these figures are all moving targets but the net result at this point in time was the end fundamentals either remained unchanged or were changed for the positive.  Granted, this may be too simplistic a way to look at the picture but the old rule of thumb is that if ending stock are increasing, prices should move sideways to lower and if ending stocks are decreasing, prices should move sideways to higher and looking at the overall market action yesterday and into this morning, that would seem to be an appropriate assessment.

Of course, this is quickly becoming yesterday’s news both literally and figuratively and the market will soon be looking for the next stimulus to grasp onto.  Certainly, the progress of South American crops will be a major one but I would dare say that the topic du jour will soon by the anticipation of and the actual stories surrounding the annual USDA Agricultural Outlook Forum that will be held in Washington on the 23rd/24th of this month.  I will be attending once again and look forward to sharing the information I can when it becomes available.

The most impressive performer yesterday was wheat, which if for no more reason that it appears to be the market that has struggled the most to move off its base and has the largest number of bear to shake out, we witnessed a push in March futures up to the highest point traded since October.  While I do not hold any illusions that this market is prepared to runaway to the upside, the action should finally be providing the confirmation that this ship has indeed committed to turn.  I should caution once again that is not to suggest that this market can push exceedingly higher until we experience a crop issue somewhere around the globe but as I commented a couple days ago, we always need to on the lookout for Black Swan type events, such as simmering or even boiling over tensions seen between Ukraine and Russia.  You can see on this charts how that unfolded back in 2014.


Optimism appears to be the name of the game today as we have strength across just about every market sector sans gold.  If we closed right now, for the week nearby corn would be up 7-cents, beans up 34-cents, and wheat up 15-cents. It actually does not stop there either as spot hogs are up $4.60 cwt, spot cattle up right at $1.00, the S&P 500 up 18.75 and the US Dollar just a touch over a full cent. On that kind of note how can I say anything other than we wish you all a great weekend.