February 12, 2016

February 2016 USDA WASDE Report

February 3rd, 2016

Report Results Summary:

US Ending Stocks (million bushels) released 02/09/2016 at 11:00 AM C
USDA Jan 16 Avg Estimate USDA Feb 16
Corn 1,802 1,809 1837
Soybeans  440 445 450
Wheat 941 947 966

More Market Commentary:

Morning Coffee Commentary 2-11-16


World Agricultural Supply and Demand Estimates (WASDE)

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 February report is typically a quiet one. The last of the big changes to the fall 2015 production was made in January. USDA does not revise production on this report and instead makes minor changes to demand.

Corn: A moderately bearish report was seen for corn. USDA raised ending stocks from last month’s 1.802 billion bushel estimate to now 1.837. That was over the trade estimate of 1.809 (ALDL 1.812). Yet another hit was seen to exports. This month the drop was 50 million. With the imports from South American into the Southeast they raised imports by 10. These numbers were partly offset by a 25 million increase in corn for ethanol.

World Numbers: A mixed tone was given in the world numbers. USDA raised their Argentina production estimate from 25.6 to now 27.0 million tonnes. Brazil was raised by 2.5 mt to now 84.0. This was offset by a 1.0 drop in production and a 1.5 increase in imports for South Africa due to their drought. World corn stocks went from 208.94 mt to now 208.81.

Price Expectations: USDA’s price outlook, via a cash corn price for Central Illinois, was left unchanged at $3.60. Yesterday’s bid for that location was $3.55. Allendale sees mixed trade for futures in February and higher prices to show in March/April.

 Soybeans: The change in ending stocks, from 440 million bushels to now 450, was just over the trade estimate of 445 (ALDL 466). The only change noted was a minor 10 million decline for domestic crush. This was made due to a decline in their estimate for soymeal exports (Argentine competition).

World Numbers: Few changes were noted on the world balance sheet. Argentina production was raised by 1.5 million tonnes while Brazil was left unchanged yet again at the current 100 mt estimate. World stocks were raised from 79.3 mt to now 80.4.

Price Expectations: USDA left their cash price outlook for Central Illinois unchanged at $8.80. Yesterday’s price for that location was $8.53 1/2. We see a sideways range in prices this month with a good rally into March/April.

Wheat: Domestic ending stocks were raised from 941 million bushels to 966. This was over the trade guess of 947 (ALDL 954). The only change noted was a 25 million bushel revision to their export forecast. Stronger world competition, Canada was named in the report, was noted.

World Numbers: World ending stocks were raised from 232.0 million tonnes to 238.9. How they got to that number was a little odd. Production was raised for Argentina by 1.5 mt. Changes in the Former Soviet Union balanced each other out. Yet another revision to China’s beginning stock was noted (+2.0). On top of this they lowered China’s domestic demand for the current year by 4.0 mt.

Price Expectations: USDA left their $5.00 marketing year average price forecast for Central Illinois unchanged. Allendale does look for higher pricing in the March/April timeframe.

 

For questions and comments, please contact Rich Nelson, Chief Strategist at 800-262-7538 or rnelson@allendale-inc.com.

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