Traders were expecting bullish numbers from Tuesday’s World Agricultural Supply and Demand Estimates (WASDE), but the projections were even friendlier than anticipated.
“USDA made some fairly substantial downward revisions to the production estimates and also some fairly substantial upward revisions to some of the demand estimates,” Joe Vaclavik of Standard Grain told AgDay’s Clinton Griffiths. “So we’re left with a much friendlier looking situation here.”
Corn was up nearly 20 cents following the report. Soybeans jumped more than 40 cents.
“We’re now looking at an 11 and a half percent stocks to use ratio for the United States that essentially represents the tightest supply and demand situation on paper for the United States since 2013,” Vaclavik said. “If you think back to 2013, where prices were during that timeframe, they were not three and a half to $4, or even four to four and a quarter, they were much better than that.”
Vaclavik says the upward price pressure is even greater on soybeans.
“The stocks to use ratio is projected at 4.2% on paper, which is very friendly historically, again, the tightest since 2013,” Vaclavik said. “Prices back in that timeframe in beans were not 10 or $11. They were 13 or $14. I’m not saying that that’s where prices are going, but I’m saying that based on what was printed on paper here today, you could make the argument that maybe we should go to those prices. I don’t know if I’m in that camp, but there will be people who make that argument.”
Corn production was estimated by USDA at 14.507 billion bu., below the trade expectation of 14.659 billion bu. and down more than 200 million bu. from the October estimate.
Bean production was estimated at 4.170 billion bu., down from the trade estimate of 4.251 billion bu. and down nearly 100 million bu. from the October estimate.
