USDA WASDE Reaction
Teucrium | March 9, 2021
The March WASDE Report was uneventful with US corn, wheat and soybean balance sheets remaining unchanged. Most analysts were looking for reductions to the corn and soybean ending stock estimates. Even though the bulls did not get the reduction to ending stocks, there was nothing inherently bearish in the report either.
This is the second month in a row where the trade has been looking for a revision to US corn export estimates. There is a wide consensus among private industry analysts that US corn exports are significantly higher versus the WASDE figures.
Attention will now turn to the Quarterly Stocks Report which will be released on March 31st. The stocks report could provide clues as to the extent that the USDA may be under estimating US corn exports.
Looking ahead, the reports on the 31st will also include the USDA’s official early estimates for acreage planting intentions for the 2021/2022 crop year.
As uneventful as today’s WASDE Report was, the coming Stocks Report may be anything but.
Stay tuned.
Corn
Ending Stocks
The USDA domestic corn balance sheet remains unchanged from the February report with ending stocks at 1.502 billion bushels which is higher versus the average analyst estimate of 1.46 billion bushels.
Production
Unchanged
Demand
Unchanged
Global
The USDA increase global ending stocks by 1.14 million metric tons (MMT) to 287.67 MMT. This is higher versus the average analyst estimate of 284.5 MMT and reflects higher production estimates which were partially offset by increased use and export estimates.
Market Response
There appears to be little or no reaction to the report in today’s trade as prices were already trading slightly lower prior to the WASDE release and remain in the same range as of this writing.
Wheat
Ending Stocks
The USDA wheat balance sheet remains unchanged versus the February report. Ending stocks of 836 million bushels is slightly lower compared to the average analyst estimate of 838 million bushels.
Production
Unchanged
Demand
Unchanged
Global
Global wheat ending stocks were revised lower to 301.19, below the average analyst estimate of 304.5 MMT. An increase in production estimates was offset by increased use and export estimates. Notably China has been auctioning off their old-crop wheat stocks as Chinese corn prices remain at a premium to wheat. The USDA believes that this dynamic “…is expected to further heighten China’s 2020/21 wheat feed and residual use…”
Market Response
Increased use of wheat for feed and a tightening global balance sheet seems to be supporting wheat prices today. As of this writing wheat prices are higher across the curve.
Soybeans
Ending Stocks
The USDA left soybean ending stocks unchanged versus the February report at 120 million bushels. The average analyst estimate was looking for a slight reduction to 117 million bushels.
Production
Unchanged
Demand
There was a small adjust met of 1 million bushels to the “Seed” category which was offset by a reduction in the “Residual” category, resulting in no change to the domestic balance sheet.
Global
Global ending stocks were raised slightly to 83.74 MMT which is higher than the average analyst estimate of 82.9 MMT. The increase in global ending stocks stems from an increase in production estimates.
Market Reaction
There appears to be little or no reaction to the report in today’s trade as prices were already trading mixed to slightly higher prior to the WASDE release and remain in the same range as of this writing.