WASDE report in line with expectations
The US Department of Agriculture (USDA) released details regarding crop use and stored grain amounts in a new World Agricultural Supply and Demand Estimates (WASDE) report on Tuesday [April 9].
“We knew, on the corn side, we’d likely see the usage number reduced – the March reports showed pretty strong stocks and there were significant usage adjustments for feed, ethanol and exports,” Hart told FeedNavigator. “We knew that was coming.”
On the soybean side, little change was anticipated and little was reported, he added.
“This was a bearish report in terms of crop markets because demand is slowing down, but the market already knew that was happening so there wasn’t any reason for the market to react,” Hart said.
At this point, the focus turns to planting progress and the potential for more certainty on the international trade market, Hart said.
Wet weather could slow planting and create a shift from corn production into soybeans, even as slowing use increases corn stocks, reckons the analyst.
“Given the weather conditions, we know that planting will proceed slowly this year and given the flooding [we know] that at least a few acres will be taken out of production,” he said. There are several considerations at this point, said Hart. “One is how slow will planting go forward? And how many acres go out of production? And how many go into a second crop – the March report was what do farmers want to plant and now what will mother nature allow them to do.”
Corn production and trade
The outlook for us corn in 2018/19 calls for a drop in feed and residual use, a drop in the amount of corn exported or used in ethanol and growing stocks, the USDA said. Feed and residual use fell by 75m bushels indicating that disappearance dropped by about 9% during the December to February period compared to the previous year.
Exports were reduced by 75m bushels to 2.3bn based on growing competition from Argentina, Brazil and Ukraine, the department said. As supply was unchanged and use fell, US ending stocks were increased by 200m bushels to 2.035bn bushels.
However, the season average corn price remains unchanged, the department added.
Globally, corn production was increased for Brazil, Argentina the EU, Mexico and Indonesia, however, it was reduced in Pakistan and the Philippines, the department said. Trade in 2018/19 is forecast to see increased exports for Brazil, Argentina, the EU and Ukraine offsetting the drop for the US.
Imports are anticipated to increase for the UEU and South Africa, the department said. However, foreign ending stocks were increased from earlier expectations based on increasing production.
Soy considerations
The US soybean forecast for 2018/19 anticipated a drop in imports, higher seed use and lower ending stocks, the USDA said. As crush and exports are expected to remain unchanged ending stocks are projected to be down about 5m bushels.
The season-average soybean price is predicted to be $8.35 to $8.85 a bushel, and soybean meal prices remain unchanged at the midpoint with a range of $305 to $325 a short ton, the department said.
A trade deal or agreement between China and the US would help clarify the trade situation, said Hart. “It would be a temporary boost to prices [and] hopefully it will bring a little more certainty back into the market,” he added.
However, the “devil’s in the details” in terms of any agreement made regarding what it would really mean for market dynamics, he said.
Looking internationally, the forecasts for the 2018/19 oilseed supply anticipate increased production, a drop in exports and higher stocks, the USDA said. Oilseed production was increased by 2m tons based on higher soybean production for Brazil and rapeseed growth in India.
Oilseed exports fell to 177.1m tons based on the drop in rapeseed trade between Canada and China, the department said. However, China’s imports of other products including sunflowerseed meal, rapeseed meal, soybean oil and palm oil have increased.
Endings stocks for oilseeds were increased by 1.5m tons based on increased soybean production in Brazil and higher rapeseed stocks in Canada, the department said.
Wheat forecast
Looking at US wheat production for 2018/19 the forecast is for supplies to stay the same, but also for a drop in exports and domestic use, said the USDA. There was a reported drop in feed and residual use during the second and third quarters.
Total feed and residual use were reduced 10m bushels, the department said. Wheat exports also were lowered by about 20m bushels based on slow export pace.
Ending stocks were increased by 31.5m bushels to a total of 1.087bn bushels, the department said. However, the season-average farm price also was increased by $0.05 per bushel at the midpoint.
Globally, wheat supplies were bumped by 2.1m tons stemming from increased beginning stocks and revisions to productions from Iran, the department said. Ending stocks were increased 5.1m tons to 275.6m.
Wheat production and exports dropped slightly, but consumption was lowered 2.9m tons based on feed and residual use in Iran and the EU, the department said.
