South America’s crops are getting larger, and U.S. projected ending stocks are adequate to meet current demand needs, according to USDA’s latest World Agricultural Supply and Demand Estimates (WASDE) released April 9.
“There were no real surprises in this report,” said Peter Georgantones, with Abbott Futures in Minneapolis. Georgantones was the commentator on an MGEX post-report press conference. “The world has plenty of wheat, and there are huge corn and soybean crops being harvested in South America.”
Following the report’s release, futures fell for corn, soybeans and wheat.
USDA pegged the U.S. corn carryout at 1.827 billion bushels, 27 million bushels lower than the average trade estimate of 1.854 billion bushels but well within the range of estimates. April’s carryout projection was substantially larger than USDA’s March estimate of 1.777 billion bushels.
“The corn carryout is not a bullish number and not a bearish number,” said Georgantones. “The market is sort of stuck right now.”
The department narrowed its projected season-average farm price for corn by 5 cents on both ends of the range to $3.55 to $3.85 per bushel.
“It’s hard to get bullish,” said Georgantones. “Farmers are holding a lot of corn.”
With so many short positions in the corn market, he said a short-covering rally is not out of the question and would offer producers a selling opportunity. He expects December corn futures to eventually drift lower to about $3.60 to $3.65 per bushel.
The U.S. estimated carryout for soybeans of 370 billion bushels was right on the average trade estimate of 370 million bushels but 15 million bushels below March’s estimate of 385 million.
USDA also lowered its season-average soybean price by 10 cents at the midpoint to $9.60 to $10.60 per bushel due to lower anticipated prices for the second half of the marketing year.
“Beans could work their way down to about $8.50,” noted Georgantones.
The nation’s projected wheat carryout of 684 million bushels was 8 million bushels lower than the average trade guess of 692 million bushels and 7 million bushels lower than March’s forecast of 691 million bushels, due mainly to higher domestic use.
USDA lowered its projection for wheat exports by 20 million bushels due to continued strong competition in world markets. If realized, wheat exports would be at their lowest level since the 2009-10 crop year. Despite weaker exports, USDA raised its projected season-average farm price for wheat by 10 cents on the low end to $6 to $6.10 per bushel.
USDA raised its world carryout for corn to 188.5 million metric tons, up slightly from March’s estimate of 185.28 million metric tons.
World ending stocks of soybeans are projected at 89.6 million metric tons, also up slightly from March’s 89.53 million metric tons.
The world wheat carryover of 197.2 million metric tons was also raised slightly from March’s 197.71 million metric tons.
“There’s plenty of corn and wheat around the world,” said Georgantones. He expects wheat prices to drag on world corn prices.
South American Production
Brazil’s corn crop was left unchanged at 75 million metric tons, but USDA raised Argentina’s production by 0.5 million metric tons to 24 million. Likewise, USDA left Brazil’s soybean production at 94.5 million metric tons, unchanged from last month, but raised Argentina’s production by 1 million metric tons to 57 million metric tons.
With planting intentions out, the focus has shifted to U.S. planting, and it appears that after timely rains, the last week of April and the first week of May could offer ideal weather conditions across much of the Corn Belt, according to Georgantones.