USDA WASDE Reaction
Teucrium | February 9, 2021
Our immediate reaction to the WASDE report.
Corn
The USDA reduced corn ending stocks by 50 million bushels month over month. This as production estimates remained unchanged at 14.182 billion bushels and exports were raised by 50 million bushels. The revision to exports was the only change on the demand side of the equation and is notable a smaller of a revision versus what private analysts were looking for.
The USDA increased their global ending stock estimate by 2.7 million metric tons (MMT). This is seen coming mostly from increases in China, South Africa and Mexico.
Market Response
Corn markets are trading lower following the WASDE release. According to a Wall Street Journal survey the average analyst guess for US ending stocks was 1.363 billion bushels vs. the 1.502 printed on this report. Market participants will likely be looking to the USDA to increase US corn exports in the March report but will also be watching closely for any cancellations of Chinese purchases as well. Additionally, attention will soon begin to shift to prospective plantings in the US where farmers are likely to plant a record number of acres for the 2021-2022 crop year.
Wheat
There was no change in the domestic wheat balance sheet month over month.
The USDA however revised global ending stocks down by 8.97 MMT tied to an increase in global feed demand in China and food, seed and industrial use for India. High domestic corn prices in China is seen to be driving increased demand for wheat as feed. The increase in demand in India is likely tied to the Indian Government’s inclusion of wheat products in a food assistance program launched in response to the COVID-19 pandemic.
Market Response
Wheat futures prices are trading lower at the time of this writing.
Soybeans
Ending stocks were revised lower by 20 million bushels reflecting a 20 million bushel increase in export estimates. There were no other changes on the domestic balance sheet.
Global ending stocks were also revised lower by 0.95 MMT due to slightly lower beginning stocks and small increases in crush and exports.
Market Reaction
Today’s report seems to be a “non-event” for the soybean trade with prices down slightly at the time of this writing. Going forward market participants will likely be keeping an eye on the Brazilian harvest, and prospective US plantings.