Grain markets this morning are mostly lower after the April WASDE report delivered by the USDA came out mostly as expected: bearish.
“We shall seek first to tell the truth rather than to study the subtle art of adjusting it to the circumstances of time and person.” – Vincent McNabb (Irish priest)
Grain markets this morning are mostly lower after the April WASDE report delivered by the USDA came out mostly as expected: bearish. The trade was a bit quiet as there weren’t too major surprises in this WASDE report. 
At a high level, stocks for all crops were raised globally, albeit domestic U.S. soybean inventories did drop a little bit. There wasn’t much movement in wheat other than Argentina’s exports being lowered by 500,000 MT to 13.7 MMT and the EU’s raised by 1 MMT to 24 MMT. While the WASDE report took center stage for a few hours, the focus returned to weather and the storm system expected this week, namely the possibility of another “bomb cyclone” to hit the Midwest. 
WASDE Report Shows Bigger Soybean Harvest
The USDA also raised the production expectations for the soybean harvest in Brazil and Argentina by 500,000 MT and 1 MMT respectively. This puts the expected haul from these two major players at 117 MMT in Brazil and 55 MMT in Argentina. While this was expected in this WASDE report, the more interesting upgrade was the USDA’s attaché down in Brazil who suggested that the 2019/20 soybean harvest could reach 124 MMT.  This is a function of a rebound in soybean yields from the current drier year, as well as acreage expanding 1% year-over-year to 90.2 million acres. As a reminder, in their Prospective Plantings report, the USDA said that American farmers will plant 84.62 million acres for their 2019/20 soybean harvest.
The USDA reduced Canadian canola exports in yesterday’s WASDE report by 1 MMT, acknowledging the current trade riff with China. This puts total 2018/19 canola shipments at 10.6 MMT according to the USDA, but that’s still 800,000 MT more than Agriculture Canada is currently forecasting! The USDA, like others, do not think that the shortfall in canola exports can be made up by demand from other countries. They point to competition from a large number of soybeans available in the world and some slower demand this year from players in Asia, Mexico, and the U.S. itself.
The flipside of this is that the USDA lowered its estimate of Chinese canola imports by 900,000 MT to 4.4 MMT for the 2018/19 marketing season. That being said, the USDA did raise Chinese imports of palm oil, sunflower meal, and rapeseed meal by a combined 725,000 MT to help offset this reduction in canola imports.
Did Corn Prices Like This WASDE Report?
As I suggested in the FarmLead Breakfast Brief on Monday, yesterday’s April WASDE report saw U.S. corn stocks climb by 44 million bushels. Granted, this wasn’t as much as the extra 270 million bushels that the USDA added to the balance sheet in the March quarterly stocks report. The increase in stocks was reflected via 75M-bushel reduction in corn exports, 75M reduction in feed use, and a 50M-bushel reduction in ethanol use.
While the USDA said that Brazil will produce 96 MMT of corn in the 2018/19 in the April WASDE report, there is some buzz down in South America that Brazil could produce a 100 MMT corn crop this year. The safrinha corn crop there was planted just after the early soybean harvest finished, and combined with some decent weather, AgriCensus is reporting that a 74 MMT second corn crop is possible. Granted, good weather in April and May is needed, if realized, it would be the largest ever for Brazil’s second corn harvest.
For knowledge purposes, most of Brazil’s first corn crop goes into the domestic feed market, with the second crop competing with U.S. exports as its crop year campaign winds down. That being said, through Week 30 of the U.S. corn crop year, just over 30 MMT has been exported (or 1.183 Billion bushels if converting metric tonnes into bushels), good for a 24% improvement year-over-year. As you can tell in the chart below though, usually we see corn export remain pretty consistent, but with a record safrinha harvest in Brazil, and a decently-sized crop in Argentina of 47 MMT would provide some serious competition.
All things being equal, weather conditions across major corn-growing states in the U.S. is back on traders’ minds with this WASDE report out of the way. That said, corn prices did improve a little bit after the WASDE report was released, and, other than hard red spring wheat is the only thing in the green this morning.
Political Activity Within Grain Markets?
I’d be remiss not to provide an update on some of the geopolitical happenings and their impact on grain markets, given how they seem to be one of the major factors influencing grain prices right now. Since the new NAFTA, or the USMCA, has not been ratified, the Canadian government is considering tariffs on U.S. agricultural goods in retaliation for Washington not relaxing the steel and aluminum tariffs.  On the U.S.-China trade war negotiations, part of the conversations include China relaxing its tariffs on U.S. ethanol products. 
One interesting note that came out of the April WASDE report was the announcement from the USDA saying that they’ll be changing the format for their monthly reporting to better reflect grain inventories from everyone in the world, minus China.  More specifically, starting in the May WASDE report, the USDA will include a column on their tables for global grain stocks, production, imports, domestic use, exports, and ending stocks that do not include China’s numbers.
In my opinion, this is statistically relevant and more transparent move by the USDA. For example, in the April WASDE report yesterday, global wheat ending stocks were forecasted at 275.6 MMT, the second-highest on record. China’s wheat stocks though account for 51% of this number! Considering that China is not a major wheat exporter, showcasing the data to markets without everyone having to do the math gives a much clearer and immediate picture of what is, in fact, available for global trade.
At 7:45 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3319 CAD, $1 CAD = $0.7508 USD)
May Corn: +1¢ (+0.3%) to $3.61 USD or $4.808 CAD
May Soybeans: -0.5¢ (-0.05%) to $8.983 USD or $11.964 CAD
May Soybean Meal (per short ton): -$0.10 (-0.03%) to $309 USD or $411.56 CAD
May Soybean Oil (cents per lbs): -0.19¢ (-0.65%) to 28.85¢ USD or 38.43¢ CAD
May Oats: -2.8¢ (-1%) to $2.785 USD or $3.709 CAD
May Wheat (Chicago): -3¢ (-0.65%) to $4.565 USD or $6.08 CAD
May Wheat (Kansas City): -2¢ (-0.45%) to $4.255 USD or $5.667 CAD
May Wheat (Minneapolis): +1¢ (+0.2%) to $5.24 USD or $6.979 CAD
May Canola: -1.6¢ (-0.15%) to $10.31/bu / $454.60/MT CAD or $7.741/bu / $341.31/MT USD
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