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Limit Up

By Tori Uhland

April 12, 2024

Last week’s much anticipated USDA World Agricultural Supply and Demand Estimates (WASDE) report didn’t give us many fireworks to trade through. There wasn’t anything super bearish, but there wasn’t exactly anything that gives the market much support, either. The 2023-24 United States corn, wheat, and soybean ending stocks revisions all came in above the average trade guesses. The USDA also took a very conservative approach towards the corn and soybean balance sheets.

The trade was expecting some revisions to the corn balance sheet for ethanol and feed usage, but the USDA made only modest revisions to their numbers despite data that shows higher demand projections for both usage categories. The lowering of 2023-24 corn ending stocks was also less than expected. USDA estimates of the Argentine and Brazilian corn crops are also still too high, but we will have to wait at least one more month to see a possible revision on those numbers. On the other hand, we have reached the point of the seasonal slowdown in export sales, and the decrease in sales may be greater than what the USDA has accounted for in their annual export projection. It was a marketing year low in sales activity based on data released last week.

The soybean balance sheets saw a downward revision in the 2023-24 export projections, but still may need to go down further. Argentina’s soybean crop is expected to be twice as large as last year, and while most of it will feed the crush industry, some of it will be exported and will remove part of the US market share. The USDA crush estimate was left unchanged, which is hard to say right now as we are going through seasonal downtime and poor margins, while at the same time opening new crush plants and expansions. US ending stocks were moved to 340 million for 2023-24, and given an additional 3 million acres in the uS, stocks could exceed 400 million bushels in the 2024-25 marketing year. The USDA also left their estimates of the Brazilian and Argentine soybean crops unchanged, but the trade assumes a revision is coming as the Brazilian agency continues to lower their crop estimate.

Revisions to the wheat balance sheet were very limited – the only change made was a five million bushel reduction to exports. Chinese cancellations of US wheat purchases are over for the year, and many exporters are expecting the majority of their outstanding purchases to be shipped by the end of the marketing year. The trade is expecting another rise in US wheat stocks in the 2024-25 marketing year with strong winter wheat crop conditions presuming a large crop and ongoing concerns of poor export demand.

The May WASDE report next month will include the USDA’s first official estimates of the 2024-25 marketing year. Without any weather events creating planting concerns in the US, it is hard to imagine a scenario that would change the overall pessimistic narrative of the grain markets.