The market was disappointed with the April WASDE in particular the South American production numbers. USDA basically punted again on both Argentina and Brazil corn and soybean production and are still well above Conab and other private estimates.
USDA left Brazil soybeans unchanged at 155 million metric tons and corn at 124 million. While Conab lowered Brazil’s soybean crop to 146.5 million and the corn to just under 111 million. Market analysts say that’s a huge difference.
Jim McCormick, Co-Founder, AgMarket.Net, says, “That was a surprise. I mean Conab has been very aggressive in cutting their crop in Brazil. The Argentinian exchanges are doing the same thing Michelle and USDA literally punted. :44 They left their estimate for the corn crop in Brazil, the bean crop in Brazil the bean crop in Argentina all unchanged to the surprise of the trade. They did lower the Argentina corn crop by 1 million metric tons but they’re still way above where the South American exchanges are.”
In fact, Wednesday the Rosario Grain Exchange cut Argentina’s corn crop 6.5 million metric. So, when will USDA lower the South American crop and why the big discrepancy?
McCormick says, “Historically the USDA tends to walk down their numbers so the fact they they’re above these other South American numbers is not a surprise but the fact that they didn’t make any revisions at all because all accounts are the corn crop down in Argentina you’re hearing a lot about disease and bug pressure and then even the Brazil safrihna corn crop its doing okay but you have heard of some areas that definitely dealt with a lot of heat and lack of rain so I would anticipate this crop to get smaller down the line it’s just a matter of when in the USDA’s viewpoint.”
He says U.S. ending stocks estimates were slightly disappointing for corn as USDA raised ethanol and feed demand but not as much as expected.
“The revision was only an upward revision on demand by about 50 million the trade was looking for close to 70, 75 million. So, it was a step in the right direction but just not what the bulls wanted to see.”
USDA raised soybean ending stocks by 25 million bushels by lowering exports, while the agency raised wheat ending stocks 25 million as well.
What does it mean for prices? McCormick says the reaction has been negative with soybeans breaking to new lows for the move.
