November 23, 2017

Feb 2017 USDA WASDE Report

Each month USDA updates various estimates of supply and demand and revises its moving target for where stocks will end at the end of the marketing year, August 31 for corn and soybeans and May 31 for wheat. The previous January 12 update held revisions for the completed fall harvest. The companion report, the quarterly Grain Stocks, gave the trade clear actual demand for the first quarter (Sep 1 – Nov 30). Those implied demand numbers were reflected on the US corn and soybean balance sheet.

The February WASDE typically holds moderate changes to old crop US demand and ending stocks. It is also notable as it updates South American production.

USDA will not start with new crop numbers until their February 23 and 24 AgForum outlook conference. Those are simply the opinions of USDA’s own analysts. They are a “first look at what we think”. The first official new crop number won’t come until the March 31 farmer survey, Prospective Plantings. The first time the new crop numbers make it to these monthly supply/demand reports won’t be until May 10. The market will begin to include its own new crop expectations into current pricing in the late/February – April timeframe.

Feb17-WASDE-US-World-cornCorn: The trade was going into today’s report expecting US ending stocks to decline from last month’s 2.355 billion bushels to 2.335. They were relatively close with today’s actual number of 2.320. It was interesting to see that USDA raised corn for ethanol by 25 million and the other industrial category by 5 today. We have no problem with the ethanol increase. There is likely even more in the coming months. They chose not to increase corn exports on this report, even though we are ahead of their expected pace by now. On the other hand, they didn’t touch the bearish feed/residual situation. That may be adjusted on the April supply/demand report, after the March 31 quarterly Grain Stocks shows them that feed/residual is not fitting their still too-high expectation. Today’s changes were only partial. At some point in the next three months USDA will raise exports and corn for ethanol by 25 million each. However, we still have a 50 – 100 million bushel drop out of feed/residual looming. Old crop corn stocks will likely be moderately higher than this at some point in the next three months. For today, the trade will call today’s report mildly bullish.

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