With WASDE out, focus turns to weather
USDA spoke, the market listened and immediately reacted...to part of Wednesday's World Agricultural Supply and Demand Estimates report data...and for a little while.
But, a widened focus -- taking into account both U.S. and world stocks, especially for corn -- caused what was initially sharply bullish to fall back to just better than neutral, analysts say.
Corn futures shot higher immediately after USDA released corn carryout numbers well below what traders expected. Going into Wednesday's WASDE report, traders expected a carryout of around 824 million bushels compared to USDA's figure of 757 million bushels. Soybean carryout fell below trade guesses, too, coming in at 125 million bushels compared to traders' estimates closer to 137 million.
Based on that U.S. corn number alone, the corn market shot sharply higher shortly after the WASDE numbers were released. Then, everybody worked their way down the pages of the report to the world stocks numbers and summarily threw on the brakes. Global corn numbers were higher for Brazil, the European Union and Russia, well outpacing declines in parts of Africa and Asia. So ultimately, though U.S. stocks continue to tighten, bigger supplies abroad make Wednesday's WASDE numbers essentially a wash.
"U.S. numbers are positive, but world ending stocks are negative. Do you want to look at U.S. numbers, or competition from the world?" says broker and analyst Don Roose with U.S. Commodities in West Des Moines, Iowa. "I think there's confusion in the U.S. numbers, and it's really a world environment. World competition has buffered our tight supplies. That's why the market's been so jumpy."
Moving ahead from Wednesday's reports, the market's focus will quickly turn to Mother Nature and and the increasing likelihood of a planting long, rain-delayed planting season.
"I think what we'll do is now we'll focus on weather here, and planting," Roose says. "There are going to be the haves and have nots with moisture."