On Friday, April 9, USDA will release its latest supply and demand estimates for the country's principal crops at 11 a.m. CDT. Corn and soybeans may see slightly lower ending stocks estimates and traders will be watching for USDA's latest estimates of South American crops.
Just last Wednesday (March 31), USDA reported March 1 corn stocks at a lower-than-expected 7.700 billion bushels (bb), confirming record demand in the first half of 2020-21. It's not surprising analysts in Dow Jones' pre-report survey are anticipating a reduction in USDA's estimate of U.S. ending corn stocks Friday, with an average guess of 1.346 bb, down from 1.502 bb in March.
An increase in the export sales estimate would be the most likely source for the 156 million-bushel (mb) reduction, as U.S. corn export commitments now total 2.59 bb, easily within reach of USDA's 2.60 bb export estimate. Feed demand and demand for ethanol could also see changes, but probably only by small amounts, if any.
Dow Jones' survey expects USDA to lower its estimate of world ending corn stocks from 287.7 million metric tons (mmt) to 284.9 mmt -- not as large as the 156 mb reduction expected for U.S. supplies. Brazil's second corn crop is mostly planted and will soon need rain. Analysts expect USDA to lower its estimate of Brazil's corn production from 109.0 mmt to 108.3 mmt or 4.26 bb. On Wednesday, USDA's attache for Brazil estimated Brazil's corn crop at 105.0 mmt, but keep in mind the World Agricultural Outlook Board rarely agrees with the recommendations of the attache.
Argentina has contended with dry weather this season and analysts expect USDA to lower its corn crop estimate from 47.5 mmt to 46.8 mmt or 1.84 bb.
U.S. soybean supplies remain extremely tight and put a lot of attention on USDA every time an estimate is made. Last week's finding of 1.56 bb of soybeans on hand as of March 1 was in line with expectations, so analysts are not expecting a big change. Dow Jones' survey expects USDA to lower its estimate of U.S. ending soybean stocks from 120 mb to 119 mb, almost not worth mentioning.
A more bullish case is easy to make for soybeans as crush activity is up 4% in the first six months of 2020-21, and the U.S. already has 2.24 bb of soybean export sales on the books, close to USDA's estimate of 2.25 bb for all of 2020-21. There is always a possibility soybean imports will be increased, especially as supplies draw down this summer.
Dow Jones' survey also does not expect much change in USDA's estimate of world soybean stocks, looking for 83.70 mmt versus the March estimate of 83.74 mmt. Analysts expect a slight increase in the estimate of Brazil's soybean crop, from 134.0 mmt to 134.4 mmt or 4.94 bb. Other outside estimates have been close to USDA, but one private firm, AgroConsult, recently estimated the crop at 137.1 mmt, reported CanalRural.com.br.
A slight reduction is expected in the estimate for Argentina, from 47.5 mmt to 46.8 mmt or 1.72 bb.
Over the past several weeks, KC wheat prices have become the bearish drag in the grain sector, and there may be a few bearish adjustments in Friday's report. USDA found 1.314 bb of wheat on hand as of March 1, a little more than expected and enough for analysts to expect a 13 mb increase in USDA's ending wheat stocks estimate for 2020-21, from 836 mb to 849 mb.
As of March 25, 723 mb of U.S. wheat have been shipped, 3 mb less than a year ago and not enough to make us confident of reaching USDA's export estimate of 985 mb by the end of May. If USDA does increase wheat's ending stocks estimate Friday, it will likely come out of export sales.
On May 12, USDA will have its first world wheat estimates for the new 2021-22 season, but on Friday, we are still looking at old-crop numbers. Dow Jones' survey expects a slight increase in USDA's estimate of world ending wheat stocks for 2020-21, from 301.2 mmt to 301.7 mmt or 11.09 bb.
In terms of market prices, I anticipate a ho-hum response to Friday's report, but I can't rule out a possible surprise.
Tune into DTN's webinar at noon CDT Friday, April 9. I'll explain the numbers of the day, talk about any surprises that might emerge and compare the market's latest clues to USDA's estimates. Register here for Friday's WASDE report webinar: https://ag.dtn.com/…
|U.S. ENDING STOCKS (Million Bushels) 2020-21|
|WORLD ENDING STOCKS (million metric tons) 2020-21|
|WORLD PRODUCTION (million metric tons) 2020-21|
Todd Hultman can be reached at email@example.com
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