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By Karen Braun
NAPERVILLE, Illinois, March 30 (Reuters) – Friday’s reports from the U.S. government will set the tone for domestic grain markets heading into spring planting as current supplies of corn, wheat and soybeans all presumably sit at multi-year lows.
The data due at noon EDT on Friday from the U.S. Department of Agriculture’s statistics service, which includes spring planting intentions and March 1 stocks, has not been well-anticipated by market participants in recent years, causing sharp reactions in Chicago futures prices.
As of Thursday’s close, most-active CBOT wheat, soybean and soy product futures have all bounced between 5% and 6% off lows set within the last two weeks, while CBOT corn has risen 7% from lows set earlier this month. All remain well off the month’s highs except for corn, which finished within 1% on Thursday.
But speculators this month abandoned bullish bets in CBOT corn and may have significantly cut back on their soybean ones. That means larger-than-expected soy numbers on Friday could encourage funds to explore bear territory, while friendly corn data may spur covering of recently added shorts.
For corn and soybeans, price action on the last trading day of March is more likely to follow the acreage outcome instead of stocks, especially for corn.
In the last nine years, most-active corn futures closed higher on this day whenever corn acres came in lighter than expected, and prices fell when corn acres were heavier than expected.
However, the corn stocks figure may or may not have followed that same trend. Moves in soybean futures followed the trade bias on acres in seven of the last nine years, though that was true on stocks only five times.
Wheat futures seem to have a mind of their own, as they have moved against the trade bias on acres for five straight years. March 1 stocks have had an equally muted impact on wheat futures, though by percentage, most-active wheat futures have recently featured lighter moves on this day versus corn or soybeans.
The harshest collective result to the end-of-March reports for corn, soybeans and wheat was in 2013, when the trade terribly overestimated March 1 stocks for all three, sending futures prices crashing. Most-active wheat futures did not return to the 2013 pre-report levels until the following year, but corn avoided those prices until 2022.
BIASES
Trade biases exhibit discernable trends in the soybean data. March 1 soy stocks have been bearish versus trade estimates for the past six years, but only three of the last 14 March soy acreage figures have been bearish (2014, 2017, 2022).
The range of analyst estimates for soy planting intentions is the smallest among past Reuters polls since at least 2007, raising surprise risks. Soy acres landing below the trade guess has recently been the most common trend among March corn and soy plantings, occurring in seven out of the last 10 years.
There is less of a trend with trade biases on corn, but March 1 corn stocks have not been bearish since 2019 and acres have not been bearish since 2020. Analysts this year have set up a reasonably wide range of estimates for both corn numbers.
The last time March corn and soy acres both landed within the pre-report ranges of analyst estimates was in 2015. The last time March corn and soy acres both landed within 1% of the average trade guesses was in 2011.
The last time March 1 corn and soybean stocks both landed within 1% of the average trade guess was in 2006, but individually they have each done it four other times since, including the last two years for corn.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Graphic- Trade biases March corn stocks, acres and price moveshttps://tmsnrt.rs/416mDGb
(Writing by Karen Braun Editing by Matthew Lewis)
((karen.braun@thomsonreuters.com; Twitter: @kannbwx))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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