The USDA World Agricultural Supply and Demand Estimates (WASDE) report for April 11 was soon forgotten once after its release on Tuesday morning following minimal changes to the U.S. balance sheet, and mostly expected revisions to world supply and demand, with only minor exceptions.
The report did result in a sharp cut in Argentine soy production but only minor changes elsewhere.
Prior to the April WASDE, the average estimate for U.S. corn ending stocks was for a minor reduction of just 26 million bushels (mb) to 1.316 billion bushels (bb). Instead, after a 10 mb reduction in food, seed and industrial (FSI), and a decline of 10 mb in corn imports, the ending stocks number was left completely unchanged at 1.342 bb. Both ethanol and exports were left untouched, although many traders had expected minor changes in each. The unexpected loss of stocks in the March 31 stocks report left traders expecting a change in corn feed and residual, and that did not happen. The U.S. balance sheet being left unchanged was regarded as slightly bearish.
On the world side, traders had expected a slight decline in world ending stocks to 295.1 million metric tons (mmt), and that was nearly right on, with the final number at 295.3 mmt (11.6 bb), down nearly 1.2 mmt from March. Perhaps the No. 1 focus was on Argentine corn production, which fell 3 mmt to 37 mmt (1.46 bb) -- just as traders had expected. Brazil's corn crop, expected to rise to 126.4 mmt was left unchanged at a still record-large 125 mmt (4.92 bb). Russia's corn production rose by 1.83 mmt to 15.83 mmt (623 mb) and EU's corn production was lowered by 1.2 mmt to 53 mmt (2.08 bb).
Other world changes were minimal but deserve mention. Egypt's corn imports fell by 1.5 mmt to 7.5 mmt (295 mb), due to Egypt's corn feeding dropping by the same. The EU's corn imports were raised 1 mmt to 24.5 mmt (964 mb). Russia's feed use of corn fell by 800,000 mt to 10.6 mmt and Mexico's feed use was up 500,000 mt. Argentina's corn exports fell by 3 mmt, while Ukraine's corn exports were moved higher by 2 mmt to 25.5 mmt (1.003 bb), with Russia's corn exports rising by 800,000 mt to account for part of the rise in production.
Prior to the report May corn futures were up 2 cents but closed the day 2 cents lower.
As in corn, traders had been looking for a cut in soybean ending stocks to account for the much lower-than-expected March 1 soy stocks. There was some thought that there could be a change in residual and possibly in crush, but neither happened, and U.S. ending stocks on soybeans remained unchanged at a still tight 210 mb -- slightly above trade expectations. Although there was no change in either soymeal or soybean oil domestic supply and demand, soy oil average price was dropped by 2 cents to 64 cents per pound to account for the recent sell-off.
On the world front, the focus was again on what changes WASDE might make to the drought-ravaged Argentine soy crop. The answer came in the form of a larger-than-expected drop of 6 mmt from March to just 27 mmt (992 mb) -- equal to some of the more dire private forecasts and said to be the lowest production in 23 years. Brazil's soy production was raised 1 mmt to a record-large 154 mmt (5.66 bb). On the heels of that dire Argentine outlook, WASDE also lowered Argentine crush by 3.25 mmt to 32 mmt (1.17 bb) and raised Argentine soy imports by over 1 mmt to 8.3 mmt (305 mb). World crush declined by a total of 5 mmt, with China accounting for a drop of 1 mmt. Brazil's soy crush rose by 500,000 mt to a record-large 53.25 mmt (1.95 bb). Argentine and Brazilian soybean exports were left unchanged. World ending soybean stocks were raised modestly to 100.3 mmt (3.69 bb).
Prior to the April WASDE, May soybeans were trading up 11 cents and finished up 10 cents for the day. The theme of tight soybean stocks was again reinforced with Tuesday's report, but traders feel that more U.S. cuts may be coming to account for the tight stocks and strong basis.
Wheat, as it always seems to be, was the proverbial red-headed stepchild of the WASDE report, but despite that unfair moniker, wheat had some meaningful changes. On the domestic side, traders had looked for a slight bump in stocks to 581 mb from 568 mb in March but got 30 million more bushels as feed was lowered by 25 mb to 55 mb and imports rose by 5 mb. The 598 mb ending stocks were 17 mb higher than expectations. The net result was considered a bit bearish for wheat.
There were some significant changes in by-class stocks, with hard red down 11 mb to 262 mb -- the lowest since 2013-14. Hard red spring rose by 31 mb to 120 mb, with soft red down 14 mb to 88 mb -- the second lowest since 2007-08, while white wheat gained 21 mb to 66 mb.
On the world scene, ending stocks fell by 2 mmt to 265 mmt (9.74 bb) -- lower than traders had looked for.
There were many individual revisions that led to the minor change above:
Both Russian and Ukraine wheat exports rose -- Ukraine by 1 mmt to 14.5 mmt (532 mb) and Russia by 1.5 mmt to a record-large 45 mmt (1.65 bb). EU exports fell by 2 mmt, Argentine exports were down 1 mmt and Brazil exports were dropped by 900,000 mt. China wheat imports rose by 2 mmt to 12 mmt (441 mb), with all of that going to feed use. EU wheat imports rose by 1.5 mmt, with feed use of wheat up by 2 mmt. Only minor reductions were posted in both EU and Argentine wheat production.
Prior to the report, KC May wheat was down 3 3/4 cents, finishing down 7 3/4 on the slightly bearish domestic changes.
Overall, the April WASDE report seemed to be quickly forgotten, with the focus now likely to be centered on the U.S. planting weather, Southern Plains wheat weather, central Brazil weather and the soon-to-expire Black Sea Grain Initiative.
Dana Mantini can be reached at email@example.com
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