Today’s May WASDE is eagerly awaited by grain markets as it’ll give us the first view of 2018/19 crop production.
“If everybody is doing it one way, there’s a good chance you can find your niche by going exactly in the opposite direction.” – Sam Walton (founder of Wal-Mart)
Big May WASDE Heads for Grain Markets
Grain markets this morning are mostly in the green as the complex prepares for today’s ultra-important May WASDE report. Today’s May WASDE will give us the first production estimates of the 2018/19 crop. This means that in this May WASDE report, we’ll also get to see what’s on the demand side of the table.
Yesterday, as recapped by Garrett in the regular Grain Markets Today column, grain markets sold off a bit ahead of the WASDE report. Other than maybe the January report, the May WASDE may be the most important crop report of the year.
Expectations for Today’s May WASDE?
Yesterday, Garrett also did an in-depth pre-report analysis of all things that we’re watching in the May WASDE report. Click the link to see all of the expectations from grain markets before the May WASDE comes out at 12 PM EST.
For all 12 crops that we cover in GrainCents, we’ll be publishing a post-May WASDE report analysis of all the numbers. For some crops (i.e. lentils), there is no production estimate in today’s May WASDE but we’ve been doing our modeling and will have some estimates available.
Expectations on the wheat side of things is a smaller crop pretty much everywhere. The market will be watching US winter wheat numbers likely more than anything. Similarly, with planted US corn acres estimated at 88 million this year, the question looking to get answered in today’s May WASDE is how far will corn stocks fall.
For soybeans, there’s a lot of questions on the demand side of the equation. More specifically, we’re looking at how many bushels will go into export versus crush. For the record, the latter is performing pretty well today, and we’ll be covering it in a more in-depth piece of analysis for our GrainCents soybean readers.
Brazil Cannot Be Ignored
One country that we’ll be watching in today’s May WASDE report is Brazil. While a lot of people are focused on supply and demand numbers of the 2018/19 crop, we also have to keep in mind that the 2017/18 growing season is still going on in Brazil (and Argentina for that matter). Thus, production of this year’s crops will likely also weigh on markets following today’s May WASDE.
Weather conditions in Brazil continue to be viewed as generally bullish for corn prices. While May and June are not historically very wet in the country, this year seems to be drier than usual. Soybean and Corn Advisor is reporting that “In some municipalities of Mato Grosso do Sul, the corn yields could be down as much as 40% to an estimated 63 BU/AC.” 
We’ve continued to see corn prices in Brazil continue to pick up. Today in Mato Grosso du Sul, prices are ranging from about $4.25 to $4.40 USD /bushel for immediate movement. For movement in July, corn prices are sitting closer to $3.85 /bushel.
In major-producing state Mato Grosso, corn prices are holding up around $3 USD /bushel. This is up about 10% from where corn prices were at this time a year ago. Supporting this is the Brazil currency, the Real, which is continuing to show some weakness against the US Dollar.
Corn prices aren’t the only ones benefiting. Soybean prices in Brazil have also improved to near-record levels. However, despite the better values, IMEA is estimating that 9.2 million tonnes in Mato Grosso alone remain unsold (or about 30% of the production). Overall, with the higher soybean prices in Brazil, it’s more than likely we could see more soybean acres again for the 2018/19 crop.
The May WASDE might give us a hint today.