Outside markets to trump WASDE
USDA left U.S. corn ending stocks unchanged, bringing them in right about where the trade expected, in its monthly World Ag Supply and Demand Estimates (WASDE) report Friday morning.
The report shows U.S. ending stocks for corn at 801 million bushels, unchanged from last month's estimate and down from the 2010-2011 estimate of 1.128 billion bushels.
U.S. soybean stocks were also left unchanged Friday, at 275 million bushels.
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- See the full WASDE report
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The report is likely bullish for the soybean trade, as it adjusted Brazil's soybean production lower, at 69 million metric tons, resulting in a 15.84 million-metric-ton ending stocks figure. The South American numbers, which include a slight reduction in Argentina's soybean crop size, aren't huge declines, but analysts say it shows a lower trend that could just be the beginning for downward adjustments in soybeans.
"World numbers are bullish. Calls are unchanged for corn, wheat a little better and soybeans a little better," says ICAP Energy LLC Derivatives Manager Scott Shellady.
Another big number Friday, traders say, was in the wheat sector. A 20-million-bushel reduction in U.S. wheat stocks looks to be slightly bullish for wheat, says Jason Ward, trader and analyst with Northstar Commodities in Chicago. That means wheat could see the biggest bump in Friday's trade, while corn and soybeans will likely see little effect from the WASDE report.
"The only change in U.S. stocks was a 20 million bushel reduction in the wheat stocks. I'm surprised they left beans unchanged; corn not so much, as they lowered corn 50 million in each of the last 2 reports," Ward says. "So, in a nutshell it is neutral corn/soy and a little friendly to the wheat. Global numbers were also friendly to wheat as we are finally chewing through some of this record world wheat supply."
The focus on smaller crops in South America won't be as directly bullish to corn and soybeans in the U.S., adds Don Roose, trader and analyst with U.S. Commodities in West Des Moines, Iowa. Instead, the focus likely will sharpen on other markets and new planting numbers for this year in the U.S.
"Yields in South American soybeans are probably taken down about what the trade had thought. It's going to be one of those reports where the outside markets have a bigger influence," Roose says. "The trade was leaning toward a lower crop in South America to ramp up exports. But, a lower crop in South America doesn't translate into more exports. And, we're going to look at these outside markets as negative and more mixed on corn and wheat and 3-5 higher on soybeans."
The big outside market factor for Friday's trade is unemployment. In its monthly estimate of nonfarm payroll employment, the U.S. Bureau of Labor Statistics (BLS) left the unemployment rate unchanged from February at 8.3%. That's likely a bearish number for the financial markets, an influence that will likely pressure the grains during Friday's session.