The February USDA World Agricultural Supply and Demand Estimates (WASDE) report tends to be one of the lesser anticipated ones of the entire year. Still, this February, WASDE managed to include a surprise or two.
Many experts, including ProFarmer’s Julianne Johnson, spotted a bigger-than-expected drop in wheat carryover.
“Traders expected USDA to trim wheat carryover by around 6 million bushels from last month, but USDA slashed the figure by 47 million bushels,” she says.
Brian Hoops, President and senior market analyst of Midwest Market Solutions, says wheat gave analysts the “most news and most surprise” for once.
“This is more than what even the most optimistic analyst would have expected,” he says.
The news boosted wheat prices, which saw double digit gains by market close. July ‘17 wheat ended 11 cents higher at $4.67 a bushel.
The corn and soybean news was less bullish, however, and both commodities ended lower on the day. July ’17 corn fell just under 2 cents to $3.84 per bushel, while July ’17 soybeans slipped more than 7 cents to settle at $10.69.
Rich Nelson, chief strategist with Allendale, Inc., notes that USDA lowered both U.S. and world corn stocks.
“These aren’t major, drastic changes,” he says. “They are mildly bullish numbers.”
According to Hoops, a big part of lower stocks has come from “red-hot ethanol demand.” Hoops suggests the market might be near the bottom right now and says there’s reasonable expectations that prices should improve.
As for soybeans, USDA made no changes to the balance sheet, Nelson says, adding that the trade expected USDA to raise export numbers and lower stocks on this month’s report. South Dakota farmer Ryan Wagner pointed out on Twitter that this is actually a multi-month trend.
“Soybean demand has now been left alone every report since the Nov. WASDE,” he says.
Hoops says he’s waiting to see if Trump’s positions on leaving the Trans-Pacific Partnership (TPP) and renegotiating NAFTA will create additional grain market disruptions this year.
“I’m surprised the market hasn’t reacted more to some of these policy changes [already],” he says.
For additional highlights from the Feb. 9 WASDE report, click here.