While some expected a big market mover report from USDA on Friday, the agency’s April World Agricultural Supply and Demand Estimates (WASDE) didn’t have much of a shock factor.
USDA adjusted corn ending stocks lower based on an increase in exports and demand from items like feed and ethanol. Alan Brugler of Brugler Marketing says now it’s just a matter of if the record commitments can ship.
“I think the question mark is the pace of shipping on the corn exports. We have a tremendous amount of corn sold, and a record large amount of unshipped sales right now,” he says. “Normally from here on out, your weekly sales go down.”
Brugler says in order for exports to keep up, the U.S needs to see a record-large shipping program from March through May.
“The fourth quarter shipping will be a little more contingent on the Brazilian crop and what their prices are doing,” he says. “But I think the biggest question mark is can we get the stuff on a vessel and get it out of here? USDA was a little conservative actually in terms of raising the exports today, and I think that’s why. They’re just not sure if we can logistically get it all out of here by the end of August.”
USDA cut soybean crush in China by 2 million metric tons, a move Brugler says may have been motivated by the increased concerns about African Swine Fever (ASF).
USDA also adjusted feed use in China by 5 million metric tons as wheat may be a cheaper feed source compared to high domestic corn prices in China.
“The bigger number that jumped off the page was the world demand number; they’ve moved it to 780,” says Kevin Duling of KD Investors. “I’ve been arguing a long time that it needed to be above 765. But then they got to 780, and it’s important to note they’re using just the Chinese substitution for corn as the reasoning. And there’s some truth to that. But if you look at their imports as well, it kind of throws a little shade against what they’re projecting as far as the Chinese numbers.”
Duling says the April report isn’t typically a big market mover in wheat, as it’s the last report of the 2020 marketing year.
