March WASDE - Not a Neutral event
Mar 08, 2013
It may be true that the bottom-line end stock numbers on USDA’s March WASDE report did not vary dramatically from trade expectations. While conventional wisdom suggests it should therefore simply slide somewhere into that backwater category known as "neutral" – it was nothing but.
The tale of the tape – price response to the report – is a better gauge of the impact and magnitude of any reports intrinsic value in adjusting trade sentiments to the market. If that be the case then what USDA presented in the March WASDE can be reasonably characterized as price supportive perhaps not in the long-term, but rather constructive near-term.
Without parsing well-publicized specific line items in the S&D ledger there are some noteworthy observations that can be made. And those are clustered in the row crops – corn and soybeans. While corn experienced revisions to the current 2012/13 marketing year forecast in both supply & demand, the net result was a wash – the end stock forecast remains at a historical and uncomfortably tight 632 Mil Bu. Likewise, with not a single line item being revised in the soybean balance sheets at the end of the day USDA saw fit to retain its February end stock levels of 125 Mil Bu.
Now, consider for a moment that trade expectations going into the report were subdued – there was not any wide held belief that any dramatic revision to end stock levels were really in the cards. Whether using revisions expressed in Mil Bu or in percent terms, the trade was at best anticipating a rather miniscule "nip & tuck". You could say revisions that were almost cosmetic in nature. The modest expectations were so slight, that even if they had been realized, it can be argued that the real net effect on forecasted physical supply would have not been meaningful.
Sifting through the numbers in the table below should provide some statistical perspective on trade expectations versus actual numbers.
Now the old-crop grain markets has been provided with what should be a fundamentally a price supportive structure near-term. And the emphasis is on Near-Term. Technical support and resistance levels, as well as key pivot points and timeframes have realigned in the wake of the March WASDE. They need to be monitored in consideration of booking old-crop sales. Please feel free to contact me on specific updates.