Just like March, the April reports from USDA aren’t expected to surprise markets.
The “trade is not expecting any major changes,” in Tuesday’s World Agricultural Supply and Demand Estimates, said Allendale’s Paul Georgy.
Kevin Duling, of KD Investors in Maupin, Ore., expressed a similar opinion.
“The trade will immediately shift back to planting weather, along with South American rainfall,” Duling said. “For wheat, a large rain event and bearish stocks numbers should be priced in, so I don’t see lasting impacts from this report.”
Brian Basting of Advance Trading agreed.
“If ending stocks (in the report) are outside of the expected range, it would be a big surprise,” said Basting. However, even though the April report “isn’t known for surprises, there could always be a surprise,” he said.
Here are the average trade forecasts for U.S. carryovers in corn, soybeans and wheat:
- Corn: 1.845 billion bu.
- Soybeans: 454 million bu.
- Wheat: 977 million bu.
“There could be some adjustments, but no large-scale changes,” predicted Dan O’Brien, associate professor at Kansas State University. He added that the use of corn in feed and industrial usage is expected to offset pressure from the global glut of grain, leading to a “neutral outcome for corn,” according to O’Brien.
Wheat could be a different story. Weak wheat exports could lead to higher ending stocks, O’Brien cautioned.
Looking ahead, any weather scare could move markets. “The front-burner is Brazil’s double crop corn, planted three week ago,” Basting said.
So what should farmers do?
Analysts are advising them to think of moving the carryover.
According to Basting, farmers should get protection on pricing for 2015 corn and beans with the goal of selling them to the floor, and also should consider the purchase of call options.
Duling agrees. “For soybeans, this is the time to catch up on sales, as this market will have a tough time rallying after the report and is due for a correction,” he said.
Feed buyers should also consider placing buy orders to guarantee feed coverage; grass dried up early in the Southern Plains, so feed prices could move.
Additionally, “with a billion bushel net short position by hedge funds, buyers cannot fall asleep, despite bearish emotions in the market,” Duling said.