USDA is set to release its latest World Agricultural Supply and Demand Estimates (WASDE) Thursday. With the June acreage report due out later this month, analysts say the June WASDE report typically isn’t the biggest market moving report.
However, with dryness in Brazil and other changes on the demand side, Arlan Suderman of Stone X Group says USDA will need to start making more adjustments on the balance sheet.
“Our Stone X producer survey that we conducted around the first of June lowered its total Brazil corn production estimate to 89.7 million metric tons, down from 100.5 million metric tons of previous month,” he says. “USDA is still at 102 million metric tons. Now, think about it. That’s about 800 million bushels, it verified, that the USDA has to account for somewhere in its global balance sheet. It’s not going to do that all at once in this next report; it’s going to take time. But that means either increased wheat feeding, decreased corn feeding, or increased dependence on U.S. exports, and probably a combination of those in the months ahead.”
Matt Bennett of AgMarket.Net says he’s not expecting big changes in the June WASDE report on the old crop side with demand. Bennett thinks there are changes USDA should make, but he doesn’t think any large-scale adjustments will hit this round.
“USDA might kind of wait around and see what this acreage looks like, and I hate to say it like that, but it just kind of feels like that’s what we’re going to see,” says Bennett. “Now, I would expect maybe a slight increase in ethanol, or corn usage for ethanol, and I’d expect maybe a little bit of an increase of 25 million bushels or better as far as corn exports, and I think they those are well warranted.”
Bennett says when it comes to new crop, the big question continues to be surrounding China.
“What are they going to do with these big Chinese purchases? There’s no question that the USDA looks a little light on their new crop exports,” says Bennett. “So, are they going to make an adjustment there? That remains to be seen. I agree with Arlan, it’s going to be very interesting to see how they address this resilient crop and world corn supplies, because there’s no doubt that there needs to be some adjustments made. I just don’t think they’re going to make anything major on one report.”
This week, China cut their forecast for corn consumption by 3 million metric tons. China says it sees less corn demand due to the country feeding other grains.
