USDA WASDE Reaction

The April WASDE was mostly surprise free. Two items immediately jumped out at us.

#1 Global Wheat Ending Stocks were revised lower, approximately 6 million metric tons (MMT) below the average analyst estimate. This as global use for feed continues to rise, something that we will continue to keep an eye on.

#2 Domestic Soybean Residual use was reduced by 17 million bushels. This adjustment conveniently allowed the USDA to leave domestic soybean ending stocks unchanged at 120 million bushels. Analysts were looking for ending stocks of 118 million bushels.

Corn

Ending Stocks

The USDA domestic corn balance sheet tightened further with ending stocks revised to 1.352 billion bushels which is below the average analyst estimate of 1.379 billion bushels and reflects a 150-million-bushel reduction versus the March WASDE. 

Note that the corn stocks/use[1] ratio is now at 9.15% and signifies tight supplies relative to expected usage. 

Supply

Unchanged

Demand

The USDA increase feed corn usage by 50 million bushels, and ethanol demand by 25 million bushels. Additionally, export estimates were raised by 75 million bushels. 

Global

The USDA reduced global ending stocks by 3.82 million metric tons (MMT) to 283.85 MMT. This is below the average analyst estimate of 284.4 MMT and reflects increase feed usage and exports.   

Market Response

There appears to be little or no reaction to the report in today’s trade as it appears that the report more or less aligned with market expectations.   

Wheat

Ending Stocks

The USDA wheat balance loosened a bit as ending stocks estimate increased by 16 million bushels to 852 million bushels. The average analyst estimate was for 846 million bushels. 

Supply

Imports were reduced by 10 million bushels impacting the supply side of the balance sheet. This was offset due to demand side adjustments (see below).

Demand

The USDA revised the Feed and Residual use category by 25 million bushels. 

Note that ending stocks are up 16 million bushels from the March report, yet there is only a net 15-million-bushel adjustment in the domestic balance sheet. The discrepancy is likely due to rounding. 

Global

Global wheat ending stocks were revised lower to 295.52, below the average analyst estimate of 301.7 MMT. The reduction is largely due to increased feed usage for wheat in China. 

Market Response

Wheat futures were trading higher pre-report and though off their inter-day highs are still up over 1%. 

Soybeans

Ending Stocks

The USDA left soybean ending stocks unchanged versus the March report at 120 million bushels. The average analyst estimate was looking for a slight reduction to 118 million bushels. Stocks/use ratio remains at 2.6%

Supply

Unchanged

Demand

The USDA lowered their Crushings estimate by 10 million bushels, Seed usage estimate by 2 million bushels Residual estimate by 17 million bushels. These reductions were offset by a 30 million bushel increase in Export estimates. 

Global

Global ending stocks estimates increased to 86.87 MMT which is higher than the average analyst estimate of 83.3 MMT. The increase in global ending stocks stems largely from an increase in production estimates, and slight reduction in crush estimates. 

Market Response

There appears to be little or no reaction to the report in today’s trade as prices were already trading mixed to slightly higher pre-report and are trading lower, yet still with-in the day’s range.   

[1] Stocks/Use Ratio: Ending Stocks divided by total usage