USDA’s world ag supply and demand estimates (WASDE) April 11 showed only minor revisions to U.S. old-crop ending stocks, but surprised traders by holding steady on strong Brazilian crop estimates.
U.S. wheat ending stocks were raised by 25 million bushels to 698 million due to reduced domestic use, with the average farm price down 5 cents to $7.10 per bushel.
Corn ending stocks were down 50 million bushels to 2.1 billion thanks to greater ethanol, feed and residual use numbers. The season average farm price for corn is down 5 cents to $4.70.
Soybean ending stocks were up 25 million bushels to 340 million on lower exports and residual use, with the average price down 10 cents to $12.55.
With the April report still focused on old crop in the U.S., the South American numbers drew more attention.
Rich Nelson, chief strategist with Allendale Inc., told FarmWeek, “USDA is keeping two big controversial points on their balance sheets so far, Brazilian corn production and Brazilian soybean production.” He said the trade has been watching large numbers in Brazil for a long time and contrary to lower average trade guesses, USDA left Brazilian corn production unchanged at 124 million metric tons (mmt) and soybeans unchanged at 155 mmt.
In Argentina, USDA trimmed its estimate of corn output by 1 mmt to 55 mmt and left soybeans unchanged at 50 mmt.
Nelson said the initial market reaction from the report was mild with corn and soybeans both down 4-5 cents.
“We are still stuck between a rock and a hard place. These balance sheet numbers for old crop, and what could be for new crop as well, certainly could imply much lower prices by the time we reach fall harvest.”
The next WASDE report comes out May 10. In the meantime, Nelson said he will be watching weather both at home and abroad. “We will be a little bit focused on Brazilian weather but a lot on the U.S. planting forecast, planting pace and whether these El Nino discussions are going to bring dryness to the U.S. “
He expects planting pace in the U.S. to be above the five-year average.
“Given the fact that we have planters ready to roll, warm temperatures and lightly above normal precipitation in the days ahead, it looks like the trade is going to be expecting some aggressive planting numbers,” he said. “The question is, will we be at or near record levels?”
Nelson said early planting starts the season off with above-trendline yield expectations.
“So we are going to be waiting on that summer discussion about maybe a little dryness for the west to really bring markets to a little higher pricing,” he said.
