April 10: Instant Reactions to the April WASDE Report

It’s time to start the countdown to the April WASDE report.

Traders in Chicago were igheroping to have this full day to digest the April WASDE report and set their positions.

However, a strange day of weather on Monday means that many people will be scanning this report and then attending Opening Day for the Chicago Cubs.

There’s a lot of excitement about the April WASDE report.

Before we jump into the numbers, let’s look at grain prices 15 minutes ahead of the WASDE report.

  • May corn prices were down 1.75 cents at $3.89 per bushel. The July contract was off 1.5 cents at $3.975.
  • May SRW Prices were down 6 cents at $4.8475. The July contract was off 5 cents at $5.01.
  • May soybean prices were up 11 cents, at $10.58. July soybeans were up 10.75 cents at $10.6775.

Of course, some people were more concerned about new crop prices.

This month, we’re paying close attention to carryout numbers across the wheat, corn and soybean complex. We’ll also be eyeing corn and soybean production down in South America, in addition to the export outlook for both Brazil and Argentina. But we’re getting closer and closer to the report.

Some people just can’t stop showing their excitement.

At 11 a.m., let’s take a look at the numbers from the April WASDE report.

As we can see, changes across the board in carryout figures and South American output figures.

We’ll dig into these figures at length in our recaps below.

Corn Cuts in South America

The USDA left U.S. production untouched in the April WASDE report.

However, they did increase U.S. carryout expectations for 2017/18 to 2.182 billion bushels. That figure was slightly below analysts’ projections. Still, this number topped the  2.127 billion bushels forecasted in March. That uptick in U.S. ending stocks was due to a  1.3 MMT drop in U.S. feed demand.

On the global front, the agency pegged world corn ending stocks at 197.8 MMT. The figure was 0.5 MMT lower than trade estimates.

There were notable cuts to production in South America. The agency cut its production estimate for Argentina from 35 MMT to 33 MMT. The new estimate is about a 20% cut from last year’s final production figure of 41 MMT. The latest cut is proof that significant dryness across the country has done serious damage to the nation’s crop. The 33 MMT figure as also below trade expectations of 33.7 MMT.

Meanwhile, the agency reduced its expectations for Brazil as well. The agency cut its Brazil outlook from 94.5 MMT to 92 MMT. The figure was lower than the 92.7 MMT projected by analysts.

The downturn in production in both Brazil and Argentina will also affect the nations’ exports. The USDA cut Argentina’s export projection from 25 MMT to 24 MMT.

The agency slashed Brazil’s export numbers from 35 MMT to 33 MMT. U.S. exports were unchanged at 56.52 MMT. Global exports declined by about 3.4 MMT to 152.57 MMT.

Soybean Supply Declines

U.S. soybean production remained untouched at 119.52 MMT.

U.S. carryout also slipped from 15.1 MMT (555 million bushels) to 14.97 MMT (550 million bushels). However, the 14.97 MMT carryout is still a big jump from the 8.21 MMT that we had at the end of 2016/17.

On the global front, there are fewer soybeans around the world. The agency said that ending stocks came in at 90.8 MMT. That was about 2.1 MMT lower than the average trade estimate.

Turning our attention to South America, we did see some changes to production estimates in both Argentina and Brazil. Starting in Brazil, the nation will produce 115 MMT of soybeans, a 2 MMT increase from the March WASDE report. The average trade estimate was 115.3 MMT.

In Argentina, the USDA made its second straight monthly cut, and it was another big one. The agency said that the nation’s soybean output will fall to 40 MMT. The March WASDE estimate was 47.0. This was the second month in a row that the USDA made a 7 MMT cut to the Argentine production figure.

The average trade estimate was 42.6 MMT.

Given the ongoing trade spat between the United States and China, we did notice a few important numbers to take into consideration. First, Brazil’s exports increased from 70.5 MMT to 73.1 MMT.

Naturally, the expectation is that Brazil’s 2.6 MMT gain would come at the expense of the United States. However, this isn’t the case. U.S. export figures were unchanged at 56.2 MMT.

Brazil’s gains actually come at the expense of Argentina, which is projected to export just 4.2 MMT of soybean this year. That figure was a 2.6 MMT drop from the March WASDE report.

Wheat Carryout Rises

In the wheat complex, the big surprise was the uptick in U.S. carryout. The agency set 2017/18 ending stocks at 1.06 billion bushels. That was well above the 1.036 billion bushels pegged by analysts. The figure also surpassed the March WASDE figure of 1.034 billion bushels.

Meanwhile, the agency pegged world wheat ending stocks at 271.2 MMT. That figure was 3.1 MMT higher than the average trade estimate.

The uptick in ending stocks is partly due to an increase in beginning stocks for the 2017/18 calendar and about a 1 MMT uptick in global production. The uptick in U.S. carryout was related to a slump in domestic feed demand that impacted total domestic use.

The uptick in global production comes from a blip in output in North Africa. The USDA maintained Russia’s output at 84.99 MMT. However, the agency did increase Russia’s global export total by another 1 MMT to 38.5 MMT.

Be sure to check back later at our FarmLead Insights page for more information on the April WASDE report.

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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