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Will Friday's WASDE be Frozen in Time?

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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USDA will release its March Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CST Friday. (Logo courtesy of USDA)

Flying back from Commodity Classic in early March, I couldn't help but think that much of my Midwestern home looked like frozen tundra from the sky. Except for a few South American exceptions, the numbers in Friday's World Agricultural Supply and Demand Estimates (WASDE) report are apt to look much the same -- frozen replicas of February's report.

USDA will release its March Crop Production and WASDE reports at 11 a.m. CST Friday.

CORN

Now that USDA was able to release its final estimates of 2018 corn production in February, there is not much left for the March report to tinker with. Winter tends to be a time of watching export traffic and, on that count, corn's total commitments remain close to USDA's estimated export pace. USDA did reduce its estimates of feed and ethanol demand for corn in February, so anything other than minor tweaks seem unlikely in March.

Dow Jones' pre-report survey of analysts expects USDA to slightly increase its estimate of U.S. ending corn stocks, from 1.735 billion bushels (bb) to 1.755 bb for 2018-19. While the average showed little change, estimates ranged from 1.685 bb to 1.835 bb -- so there are some dissenting views. At the Agricultural Outlook Forum on Feb. 22, USDA already said it expects ending stocks to come down to 1.65 bb in 2019-20, but new-crop estimates will not be included in Friday's numbers.

Among world estimates for corn, Dow Jones' survey expects USDA to lower ending corn stocks slightly, from 309.8 million metric tons (mmt) to 309.1 mmt (12.17 bb). Eyes will look first to Brazil where Dow Jones expects to see a slight increase in the 2018-19 crop estimate, to 94.6 mmt (3.72 bb). Then to Argentina where the crop estimate is expected to stay at 46.0 mmt (1.81 bb). Both estimates are significantly higher than the previous year's 82.0 mmt for Brazil and 32.0 mmt for Argentina.

With crop conditions currently favorable down south, it seems safe to say U.S. corn exports will have more competition in 2019-20.

SOYBEANS

As with corn, USDA's February WASDE report virtually laid to rest the production side of the ledger for soybeans for 2018-19. However, unlike corn, the potential scenarios for soybean demand remain highly uncertain in 2018-19 and beyond, even as negotiations are said to be getting close to achieving an agreement with China.

For our narrow purpose, there probably isn't much new in the past 30 days for USDA to significantly change its demand estimates for soybeans, but there is room for a reduction in the export estimate. Apparently, most analysts in Dow Jones' survey don't anticipate a bearish change in USDA's soybean estimates, as their average estimate expects USDA to drop U.S. ending stocks from 910 million bushels (mb) to 898 mb. The range of estimates shows some doubt, spanning from 852 mb to 940 mb.

On average, analysts expect only a slight reduction in USDA's estimate of world soybean stocks, from 106.7 mmt to 106.3 mmt (3.91 bb). The range of guesses is actually fairly wide, from 104.4 mmt to 113.6 mmt, and reflects some of the difficulty estimating soybean demand at a time when Asia is dealing with the African swine virus and China is dealing with U.S. tariffs. Brazil's crop estimate will get quick attention and is expected to fall from 117.0 mmt in February to 115.4 mmt (4.24 bb) in March. The crop estimate for Argentina is not expected to show much change, according to Dow Jones' survey, looking for 55.2 mmt (2.03 bb) in March.

WHEAT

2018-19 is the fourth consecutive season that the U.S. is expected to have ending wheat supplies near or above 1 bb, so let's just admit up front that it will be difficult to expect any bullish news for wheat in Friday's report. Dow Jones' survey expects USDA to increase its estimate of U.S. ending wheat stocks from 1.010 bb to 1.024 bb, a minor tweak that keeps prices under bearish pressure.

As mentioned earlier, new-crop estimates will not officially be a part of Friday's report, but USDA's early estimate of 944 mb of U.S. ending stocks in 2019-20 adds another bearish factor to all wheat traders will be considering on Friday.

It has been a long winter for U.S. wheat producers that watched winter wheat prices drop over 70 cents a bushel the past five weeks. It is not likely there will be much in Friday's world wheat estimates to turn the tide. Dow Jones' survey expects USDA's estimate of ending world wheat stocks to increase slightly, from 267.5 mmt to 267.8 mmt (9.84 bb).

After reading the above preview of Friday's WASDE report, I wouldn't blame anyone for going back outside to scoop snow. But we never know -- USDA may have a surprise waiting. Stay tuned to DTN Friday as we deliver the details of USDA's latest WASDE report shortly after 11 a.m. CST.

At noon CST Friday, join DTN's post-report webinar where I will discuss USDA's numbers and what they mean for grain prices. Sign up now for Friday's webinar at: https://dtn.webex.com/…

U.S. ENDING STOCKS (Million Bushels) 2018-2019
Mar Avg High Low Feb 2017-18
Corn 1,755 1,835 1,685 1,735 2,140
Soybeans 898 940 852 910 438
Wheat 1,024 1,050 1,010 1,010 1,099
WORLD ENDING STOCKS (Million metric tons) 2018-2019
Mar Avg High Low Feb 2017-18
Corn 309.1 312.0 306.3 309.8 340.8
Soybeans 106.3 113.6 104.4 106.7 98.1
Wheat 267.8 269.0 266.0 267.5 280.0
WORLD PRODUCTION (million metric tons) 2018-19
Mar Avg High Low Feb 2017-18
CORN
Argentina 46.0 47.0 44.0 46.0 32.0
Brazil 94.6 96.0 93.0 94.5 82.0
SOYBEANS
Argentina 55.2 56.7 53.0 55.0 37.8
Brazil 115.4 117.0 113.0 117.0 120.8

Todd Hultman can be reached at todd.hultman@dtn.com

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(AG/BE)

Todd Hultman