USDA’s World Agricultural Supply and Demand Estimates (WASDE), released March 10, provided the trade with a few surprises. First, USDA raised corn exports and lowered 2013-14 corn ending stocks instead of raising supply as expected. Second projected soybean exports came in lower and ending stocks higher than expected. And finally except for a drop in Brazil’s soybean production, USDA left the South American crop production unchanged.
Traditionally there is not much interest in the March report, but given the recent pace of U.S. corn exports and unrest in Ukraine, the March report was more closely watched than it typically is, says Randy Martinson executive vice president with Progressive Ag in Fargo, N.D. Martinson was a commentator on an MGEX post-report press conference.
And USDA did not disappoint.
Corn Stocks Lowered
USDA raised projected corn exports by 25 million bushels due to the stronger pace of shipments in recent weeks. Projected ending stocks of corn were lowered by an offsetting 25 million bushels. Analysts were expecting USDA to raise corn ending stocks by 7 million bushels to 1.456 billion bushels.
"We have slowly been chewing away at old-crop corn stocks, which should be friendly to corn," says Martinson. With South America’s corn production and world ending stocks both higher than expected, though, Martinson says the report will most likely be neutral for corn.
The department narrowed its projected season-average farm price for corn by 5 cents on both ends of the projected range to $4.25 to $4.75 per bushel.
Soybean Exports Not as Strong as Expected
USDA raised its estimate for U.S. soybean exports, which reduced ending stocks compared with last month’s WASDE report. However, the department raised exports by only 20 million bushels to a record-high 1.53 billion bushels.
"Our current export pace on soybeans is 1.6 billion bushels," says Martinson. "Either there will be some big cancellations in coming months, or USDA will slowly have to increase its forecast for soybean exports."
The estimated soybean crush was reduced 10 million bushels to 1.69 billion, reflecting weaker-than-expected soybean meal use.
Ending stocks of soybean for the 2013-14 crop are estimated at 145 million bushels, down 5 million from last month’s estimate but 4 million bushels higher than the average trades estimate.