WASDE Report “Bullish for Five Minutes”

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by Katie Micik, DTN Markets Editor

WASHINGTON (DTN) — USDA cut Brazil and Argentina’s soybean production, as traders expected, which ate into the global ending stocks estimates. USDA left U.S. ending stocks for corn unchanged, which came in at the high end of traders’ expectations, while trimming domestic soybean and wheat ending stocks.

For Crop Production: http://usda.mannlib.cornell.edu/

For World Agricultural Supply and Demand Estimates (WASDE): http://www.usda.gov/

WORLD PRODUCTION AND ENDING STOCKS

CORN: USDA kept Brazil’s estimated corn crop steady at 62 million metric tons. Argentina’s crop was also trimmed to 21.5 million metric tons from its March estimate, a 0.5 mmt drop.

Global ending stocks declined to 122.71 mmt, with total use decreasing by 2.2 mmt, with the reduction coming from global feed use. The updated estimates put the global stocks-to-use ratio at 14.1{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0}, a slight decrease from last month.

“Global corn ending stocks were trimmed by 1.8 mmt due to a 4 mmt increase in 2010-2011 (last year’s) Chinese feed demand,” said DTN Senior Analyst Darin Newsom. “Taking that into account, the 2011-2012 numbers aren’t as bullish.”

SOYBEANS: As expected, USDA cut its estimates for Brazil and Argentina’s crops. It pegged Brazil’s crop at 66 mmt, a 2.5 mmt decrease from March. Argentina’s crop came in a 45 mmt, a 1.5 mmt decrease.

The lower South American production figures contributed to a 1.78 mmt decrease in world ending stocks to 55.52 mmt, which puts the stocks-to-use ratio at 21.9{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0}.

“Soybeans should command the most attention with global ending stocks falling to 55.52 mmt and ending stocks to use pegged at 21.9{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0},” Newsom said.

WHEAT: USDA estimates Canada will produce 25.3 mmt of wheat this year, and Australia will harvest 29.5 mmt, both estimates unchanged from March. Global ending stocks remain large at 206.27 mmt, a 3.31 mmt drop from last month’s estimates, with a stocks-to-use ratio of 30{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0}.

U.S. ENDING STOCKS

CORN: U.S. ending stocks were left unchanged at 801 mb. In fact, no U.S. corn estimates for exports, feed, etc. changed. Traders had expected USDA to trim stocks by 84 million bushels to 717 mb. The April estimate leaves the stocks-to-use ratio at 6.3{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0}.

“If demand over the second half of the marketing year comes in near normal, this projection is in line with the March 30 quarterly stocks estimate,” Newsom said.

SOYBEANS: USDA gave soybean ending stocks 25 mb haircut from March to 250 mb, due to 15 mb increases in export demand and domestic crush and a 5 mb decrease in seed use. The estimate puts stocks-to-use at 8.2{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0}, almost a full percentage point below the March stocks-to-use ratio.

WHEAT: USDA cut ending stocks to 793 mb, slightly lower than the average trade estimate but within the range. Feed demand increased 35 mb, contributing to the decline in stocks. The stocks-to-use ratio remains comfortable at 36.2{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0}.

“The bottom line is the U.S. ending stocks report could be viewed as bullish, possibly for five minutes or so,” Newsom said.

 

© Copyright 2012 DTN/The Progressive Farmer, A Telvent Brand. All rights reserved.

Posted with DTN Permission by Haylie Shipp

 

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