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WASDE report supports grain prices

04/10/2012 @ 6:50am

DES MOINES, Iowa (Agriculture.com)--The U.S. corn and soybean stocks tighten and the South American crops get smaller, according to the USDA Tuesday.

Corn is seen opening 2-5 cents higher, soybeans are called 10-15 cents higher and wheat 5-7 cents higher. The trade thinks the world carryover numbers are bullish.

U.S. Grain Stocks

In its WASDE Reports, the government agency estimated the U.S. 2011-12 corn carryout at 801 million bushels, compared to the average trade expectation of 717 million and the March estimate of 801 million bushels.

For soybeans, the U.S. 2011-12 stocks estimate is 250 million  bushels vs. the average trade estimate of 246 million and the government's March estimate of 275 million.

The USDA pegs the U.S. 2011-12 wheat carryout at 793 million bushels vs. the average trade estimate of 796 million bushels and its March estimate of 825 million bushels.

World Production

In its Tuesday report, the USDA put the 2011-12 Argentina corn crop tag 21.5 million metric tons vs. the average trade estimate of 21.5 million metric tons and the government's previous estimate of 22.0 mmt. USDA sees Brazil's 2011-12 corn crop at 62.0 mmt vs. the average trade estimate of 61.8 mmt and the March estimate of 62.0 mmt.

For soybeans, the USDA estimates the 2011-12 Brazil production at 66.0 mmt vs. the average trade expectation of 67.0 mmt and the government's previous estimate of 68.5 mmt.

Argentina's soybean production estimate is pegged at 45.0 mmt vs. the  average trade estimate of 45.3 mmt and the USDA's March estimate of 46.5 mmt.

World Carryover

Perhaps the section of the Reports that the trade finds most bullish is  the World Carryover estimates.

For corn, the USDA sees carryover at 122.7 mmt vs. its March estimate at 124.5 mmt. For soybeans, the world carryover is at 55.5 mmt vs. March's 57.3 mmt. USDA pegged world wheat carryover levels at 206.3 mmt vs. the March 209.6 mmt.

Trade Reaction

Jason Ward, Northstar Commodity analyst, says the report could ultimately be bearish for the corn market, with the carryout left unchanged.

"Very surprising to see following last month’s supply/demand. It’s almost as if they (USDA) ignored the Grain Stocks report from the end of March. Kind of a joke really that WASDE doesn’t take into account what USDA says. Our bias was this corn carryout would approach pipeline around 700 million, but maybe they are setting a new pipeline at 800 million bushels. Definitely impossible to explain to a customer how USDA says we have less corn on supply, but WASDE shows no change," Ward says.

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