USDA raised soybean production in Brazil by 2 million metric tons to 125 mmt in Tuesday’s world ag supply and demand estimates (WASDE) report.
So, the fact that the Ag Department also raised its estimate of U.S. soybean exports by 50 million bushels to 1.825 billion bushels in this month’s report was a pleasant surprise to some.
Unfortunately, though, the WASDE report wasn’t much of a market-mover as the trade quickly turned its attention to USDA’s 2020 baseline crop estimates due out next week along with the March supply and demand and prospective plantings reports.
“All in all, it was a pretty benign report. I think we’ll put it to bed pretty quickly,” said Karl Setzer, AgriVisor commodity risk analyst.
“The soy export number was bumped up 50 million bushels,” he noted. “But we’re going to have to be as price competitive as ever to maintain our share of the global market. The trend obviously is Brazil keeps ramping up soybean production.”
If the Brazilian soybean estimate of 125 mmt comes to fruition, it would mark the seventh record crop there in the last 10 years, Setzer noted.
USDA subsequently ratcheted down its 2019/20 season average price estimate for soybeans by 25 cents to $8.75 per bushel.
The season-average corn price estimate, on the other hand, remains unchanged at $3.85 per bushel.
The Ag Department lowered corn exports by 50 million bushels, to 1.725 billion bushels, reflecting a slow pace of shipments. But, it raised the estimate of corn used for ethanol by an equal 50 million bushels, thus leaving ending stocks unchanged from last month at 1.892 billion bushels.
“I guess it’s business as usual,” said Curt Kimmel, owner/commodity broker with Bates Commodities in Normal. “The trade was prepared to see slightly tighter ending stocks, but they remain unchanged for corn.”
Kimmel recommends farmers look for additional opportunities to sell old-crop corn as quality issues continue to crop up for grain in storage.
Looking ahead, he suggests farmers place orders above the market and look to be scale-up sellers while using a put or option to establish a price floor for downside protection.
Elsewhere, USDA increased its estimate of wheat exports by 25 million bushels to 1 billion bushels, reflecting growing competitiveness in the international market.
Ending stocks of wheat declined by a corresponding 25 million bushels to just 940 million bushels, a five-year low.
“A year and a half ago, we were getting worried about a 2 billion-bushel carryout for wheat. Now we’re down to 940 million bushels,” Setzer said. “I think the U.S. has a good chance to sell more wheat. The thing is global production is up, so we have to remain competitive pricing.”
The season average price estimate for wheat remains unchanged at $4.55 per bushel.