USDA's February WASTE - I mean WASDE, held few changes from January's hullabaloo.
One number of interest, albeit minor, was the guess on corn exports increased by 100 mb.
Don’t Miss a Day: From crude oil to coffee, sign up free for Barchart’s best-in-class commodity analysis.Also, as has been reported from Brazil, that country's big soybean crop keeps getting bigger.
At noon (ET), the US ag industry throng awaiting manna from heaven was instead given a big ol’ nothingburger from USDA. I’ll go over the numbers in the individual segments momentarily, but a quick summary tells us after crippling King Corn, and therefore the Grains sector in general last month, there wasn’t much left to do this time around the calendar. There’s also the fact it is February, and USDA is between the January hullabaloo and the second first look at new-crop production guesses at the annual Ag Forum later this month. So why give the masses anything.
Corn: Since I mentioned King Corn in the opening Summary, I’ll keep the market in the leadoff spot today. A quick look at old-crop futures and we see, well, not much. March (ZCH26) posted a 3.25-cent trading range, May a 2.75-cent trading range, and July a 3.0 cent trading range, all combined, overnight through Tuesday’s close. When the final bell rang, the three contracts were within fractions of Monday’s settlement. Okay, with that out of the way, what did USDA have to say? As expected, given the arsenic it slipped King Corn in the January supply guesses, that side of the ledger was left unchanged in February. Also as expected, the only change on the demand side was a 100 million bushel increase in export, pushing the latest guess to 3.3 billion bushels. Recall from Morning Commentary when I mentioned the pace projection at the end of January, based on reported weekly shipments, was roughly 4.1 bb. Here’s the thing, the pace projection continues to come down each week, usually, while USDA increases its guess each month. The fun will be projecting where these two converging trendlines meet. As for real fundamentals, they didn’t change, but then again we didn’t expect them to.
Soybeans: Let me set the soybean market stage for you: USDA didn’t touch the January US supply and demand ledger in February, not a single category – even the usually entertaining “residual demand” was left unchanged – not a single number. The bottom line remained the same, an ending stocks guesstimate of 350 million bushels. If there was a number vulnerable to a new guess it was US soybean exports. At the end of January, reported weekly shipments projected a pace of 1.168 billion bushels. In the February WASDE, USDA left its guess at 1.575 bb, roughly 400 mb above the pace projection. I’ll offer you up this little tidbit of information: Through the last week of February the US has shipped roughly 80% of what total exports turn out to be. Again, as of late January the US had reported marketing year shipments of 806 mb. But big things are going to happen! The wannabe Grand Poohbah of Greenland told us so!! Right. USDA’s latest guess on Brazilian production was another record high of 180 million metric tons, as compared to last month’s 178.0 mmt, while Brazil’s exports and China’s imports were left unchanged at 114.0 mmt and 112.0 mmt respectively. Still, the March futures contract (ZSH26) closed 11.75 cents higher for the day.
Wheat: What was the shocking number in USDA’s data dump for the wheat sub-sector Tuesday? Let’s see, total wheat supplies were left unchanged at 1.985 billion bushels, still the largest in who knows how many years. Wait a minute, that wasn’t a surprise at all. We’ve known for months (years?) the US supply situation far outweighs demand based on National Cash Indexes ($CSWI) ($CRWI) ($CRSI) running below previous 5-year month-end lows and applying the Law of Supply and Demand (something few, if any, ag “economists” want to talk about). What else was there then…Right, USDA, in its infinite wisdom lowered food demand for all US wheat by – wait for it – 5 million bushels! Wow…all of 5 million bushels. I’m sure there were a lot of calculators exhausted coming up with that one. (Yes, food demand. The gluten sensitivity epidemic must be spreading like wildfire.) Regardless, all wheat ending stocks were increased by that same 5 mb as all other supply and demand categories were left unchanged. On the global ledger, the ending stocks guess was decreased by 740,000 mt due in large part to a 2.0 mmt increase in Argentine exports and 1.0 mmt increase in Canadian exports, though it wasn’t clear where those exports were going.
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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