OMAHA (DTN) — Pre-report estimates heading into Friday's May USDA Supply and Demand and Crop Production reports are mixed. The question is, do the markets agree?
USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Friday.
CORN
Pre-report estimates for corn show old-crop (2013-2014) ending stocks falling by another 15 million bushels, most likely due to a similar increase in export demand. While weekly shipments remain behind pace to meet USDA's April projection of 1.75 billion bushels, the weekly curve continues to show a solid increase in movement. Assuming all other supply and demand categories are left unchanged, ending stocks are expected to come in at 1.316 bb. The May report also provides the “initial” look at 2014-2015 crop production and supply and demand. Using previous estimates of production, adding in the expected beginning stocks figure of 1.316 bb (2013-14 ending stocks), and subtracting expected 2014-2015 ending stocks of 1.618 bb puts total projected demand at 13.532 bb. Much of this 152 mb increase from what is expected to be seen for old-crop might be attributed to a larger new-crop export figure near 1.7 bb. All of this would result in an ending stocks-to-use ratio of 12{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e}. Depending on one's point of view, this could be bullish, bearish or neutral compared to the expected 2013-14 number of 9.8{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e}.
SOYBEANS
With export demand finally dying down in old-crop soybeans, it seems large-scale adjustments to 2013-2014 supply and demand are unlikely. Pre-report estimates for U.S. ending stocks averaged 132 mb, down slightly from April's 135 mb. If this is seen, the slight increase in demand could come from either crush or exports. In regard to the latter, through 34 reporting weeks of the marketing year, export shipments were already at 1.543 bb of USDA's estimated 1.58 bb. Another possibility is that imports are upped again, but offset by a like increase in total demand. As for new-crop, pre-report estimates are expecting a 10-year high of 300 mb. Given earlier estimates for acreage, yield and production, 2014-2015 demand would have to jump to about 3.485 bb, putting possible ending stocks to use at 8.6{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e}. One possible category that could come in higher than expected would be new-crop crush demand since exports are already projected to grow by another 20 mb to 1.6 bb. As with corn, if these results come to pass, they could be viewed as bullish, bearish or neutral when compared to the expected 3.9{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e} (a record low) for 2013-2014.
WHEAT
It is highly likely that anything USDA has to say about new-crop wheat supply and demand, including projections for winter wheat production, will be discounted immediately for being outdated. Conditions across the U.S. Southern Plains since the beginning of May have deteriorated, incinerating ideas of an expected 22 mb increase in HRW production from last year. With new-crop numbers likely to be ignored, only scant attention will be paid to old-crop where a minor 3 mb increase is expected in ending stocks. If pre-report estimates hold true for world ending stocks numbers with a slight decrease in old-crop to 185.7 million metric tons and 183.7 mmt for 2014-2015, the market could view the bottom line as neutral to slightly bullish. However, these numbers will also draw a great deal of skepticism due to the inclusion of questionable U.S. estimates.
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Posted with DTN Permission by Haylie Shipp
