Instant Reaction to the February WASDE Report

It’s February 8, which means it’s time for the monthly WASDE report from the USDA.

If you’re looking for the abridged version of the recap, we’ll let Easy Money handle it.

Soybean prices and corn prices were largely unchanged following the report. But wheat prices in Chicago and Kansas City gave back about half of their gains from yesterday’s pop.

Let’s take a look at the report for key numbers from Thursday’s WASDE update.

Wheat Prices Slide on Production Bump

Five minutes before the release of the WASDE report March SRW contracts in Chicago were off 6.5 cents at $4.54 per bushel. In Kansas City, March HRW contracts were down 7.5 cents at $4.74 per bushel.

And in Minneapolis, spring wheat contracts added 0.5 cents at $6.1275.

Then came the report… Tensions were running high…

The USDA did note that global wheat inventories declined from 268.02 MMT to 266.1 MMT.

But that included a slight uptick in U.S. ending stocks by 20 million bushels. That gain was fueled by a 25 million bushel decline in expected exports.

As we noted recently in GrainCents, global wheat trade is experiencing a shakeup. The USDA confirmed that Russian, Argentinian and Canadian exports are reducing demand for shipments from the United States and the European Union.

Ten minutes after the WASDE, March SRW contracts were off just a bit more – 8 cents – and traded at $4.525 per bushel. HRW contracts shed 9.75 cents.

U.S. Corn Stocks Decrease

Five minutes before the release of the WASDE report March corn contracts added 0.75 cents at $3.66 per bushel.

Could there be a surprise?

The answer is no. Area planted remained at 90.2 million acres, while the harvest acreage figure remained at 82.7 million.

Corn yields were unchanged at 176.6 bushels per acre.

The only noticeable change was an uptick of 125 million bushels in exports. As we’ve noted, the U.S. has seen a large uptick in demand thanks to weather problems in Argentina and logistical challenges in Ukraine.

That uptick in exports reduced ending stocks by 125 bushels.

Well, that was anticlimactic… huh?

The more important story is what is happening around the globe.

The USDA said that world ending stocks decreased from 206.57 MMT to 203.09 MMT.

That 3.48 MMT decline is certainly positive news.

Also positive, the USDA slashed Argentina’s production estimate down to 39 MMT. That figure was a 3 MMT decline from the January estimate.

But any optimism over that change was short-lived. The USDA left the Brazilian output figure at 95 MMT. Analysts had expected an average decline to 93.7 MMT.

Fifteen minutes after the report, March corn prices were up 0.75 cents, the same as pre-report.

Five minutes before the release of the WASDE report March soybean prices sat up 4 cents at $9.87. That was a good price to take some profits off the table… but who feels like gambling?

Soybean Prices Get Slight Gains

March soybean prices traded up 0.25 cents at $9.8325 five minutes before the report.

So, what happened?   

The USDA didn’t change acreage, harvested acreage, or yield expectations.         

They did cut exports by 60 million bushels, due to weakness in Chinese buying. That figure bolstered ending stocks by the same amount.

Markets were more focused on what was happening in South America. The USDA cut its soybean production figure for Argentina from 56 MMT to 54 MMT. As I noted this morning, it would have taken a number below 54 MMT to really get a pop in prices.

The reason was that the USDA did hike the Brazilian output estimate to 112 MT (from 110 MMT), which helped offset part of the reduction to the Argentine crop. Still, global stocks did slide from 98.57 MMT to 98.14 MMT.  

So that’s something…

Twenty-five minutes after the report March soybeans were up 3.25 cents to trade just above $9.86 per bushel.

Grain Prices Recap

This Tweet sums of the day…

But there are still another 90 minutes in the trading session.

Did Simon Casey speak too soon?

I’ll let you know later in Grain Markets Today. Bookmark your site, here.

About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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