USDA’s April World Agricultural Supply and Demand Estimates (WASDE) show supplies of corn and soybeans are even tighter than expected, yet corn prices fell following the report. Why?
"USDA gave the bulls everything they could have hoped for," says Rich Nelson, director of research for Allendale in McHenry, Ill.
USDA raised projected corn exports by 125 million bushels and reduced corn ending stocks by the same amount to 1.331 billion bushels, well under the expected 1.403 billion bushels.
"Ending stocks for corn were quite a bit lower than expected, which could be positive for the corn market," says Louise Gartner of Spectrum Commodities in Beavercreek, Ohio. Gartner was the commentator on a post-report MGEX conference call.
Export sales of U.S. corn in March continued strong due to higher world demand, says USDA in its commentary. The department raised its 2013-14 season-average farm price for corn by 10 cents to $4.60 at midpoint and narrowed the range to $4.40 to $4.80.
Record Soybean Imports and Exports
U.S. soybean supplies are a projected 3.49 billion bushels, up 30 million bushels. Projected soybean ending stocks of 135 million bushels were 4 million bushels less than expected.
"It’s going to be tough for USDA to take ending stocks lower, because soybean supplies are extremely tight," says Gartner. "It was impressive to see USDA raise exports of soybeans. The trade had been expecting massive cancellations from China, which we haven’t seen."
The department raised soybean exports by 50 million bushels to 1.58 billion, reflecting record year-to-date shipments and large outstanding sales. Imports, however, are also rising to meet U.S. sales of soybeans. USDA now forecasts soybean imports at a record 65 million bushels based on trade through February and prospective large shipments from South America later this year.
"USDA will, just like last year, manage the balance sheet," says Nelson. "Soybean stocks are probably tighter than USDA is recognizing."
He expects soybean prices to remain strong into June, but when acres now intended for corn shift into soybeans, prices could drop.
"We expect a bearish surprise in the June 30 Acreage report," says Nelson.
Despite relatively high prices and record-large harvests in South America, U.S. exports have remained strong, especially to China, notes USDA.
Looking globally, USDA raised its forecast for corn production by 6.4 million tons due to a 2-million-ton increase in Brazil and 1-million-ton increases in both South Africa and Russia.
Soybean production was slightly lower than expected in Argentina at 54 million metric tons and slightly higher than expected in Brazil at 87.5 million metric tons.