Soybeans

The USDA reports this morning were considered bearish with the market called 8-12 cents lower on the opening. Quarterly stocks as of March 1st came in at 1.27 billion bushels which was about 65 million bushels more than traders expected. Soybean planting intentions came in at 78.098 million acres as compared with 78.5 million expected and 77.5 million last year. While the plantings number was slightly below expectations, the hefty stocks number eases traders fears of tightening ending stocks for old crop. This also means that beginning stocks will be about 60 million bushels above trade expectations.

PRICE OUTLOOK: Traders see the stocks number as bearish as this will boost both old crop and new crop ending stocks estimates for upcoming supply/demand reports and we could also see adjustments higher in world ending stocks which are already at the second highest in history. November soybean resistance comes in at 930 3/4 with 895 as initial downside objective and then 880 1/4.

Corn

The USDA planted acreage and March 1st stocks reports were considered bearish with the market called 3-5 lower on the opening. Planting intentions came in a bit below expectations at 88.798 million acres as compared with trade estimates near 89.2 million and 86.5 million last year. However, the need for the extra acres may come into question with the bearish grain stocks numbers. Stocks came in at 7.694 billion bushels which was near 200 million bushels above trade expectations and a whopping 740 million bushels above last year. The stocks number should lead to a sharp revision higher in old crop ending stocks in the next supply/demand which means a higher beginning stocks number for the 2010/11 season.

PRICE OUTLOOK: The report is clearly bearish with resistance for December corn now at 385 with 370 3/4 as initial downside objective. July corn looks set for a further break to 356.

Wheat

Today’s USDA reports were considered negative across the grain complex. In wheat, acreage was higher than expected, but quarterly stocks came in slightly below trade expectations. Traders are looking for the wheat market to open 2-4 cents lower. The USDA pegged all-wheat acreage at 53.8 million, about 500,000 acres above the average trade estimate. Last year’s planted area for all-wheat was 59.133 million acres. Spring wheat area was pegged at 13.9 million acres this morning, about 500,000 above trade expectations. Winter wheat was also bumped to slightly above trade expectations at 37.7 million. Stocks as of March 1st were 1.352 billion bushels in wheat, about 15 million below trade expectations. This compares to stocks of 1.040 on March 1st, 2009.

PRICE OUTLOOK: The overall negative tone of the reports could pull May wheat back down to new contract lows. If so, this would mark the fifth day in a row that May wheat has made new lows. The question then may be whether trend-following funds will add to their near-record large net short position at these price levels, or whether they will be more interested in covering shorts on weakness.