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Analyst discusses potential outcomes of WASDE report

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The U.S. Department of Agriculture has released its estimates for Thursday’s World Agricultural Supply and Demand (WASDE) report. A market analyst overviews the estimates and weighs the potential outcomes.

The U.S. Department of Agriculture (USDA) prepares to release its October World Agricultural Supply and Demand (WASDE) report at 11 a.m. CDT on Thursday. The average estimate for corn ending stocks is 1.919 billion bushels, while the average estimate for soybean ending stocks is 898 million bushels.

Zaner Ag Hedge market strategist Brian Grossman says the report holds a lot of bearish potential, citing record breaking soybeans ending stocks.

“The Quarterly Grain Stock we had at the end of September was also a relatively bearish report and the market did not react all that bearishly. In fact, we continued to bounce after we got that report,” Grossman said. “I wonder – If we don’t have a lot baked into this cake, the market may be hesitant to react to a larger number, especially if we’re still in a very wet pattern come Thursday.”

Grossman notes the soybean market tends to rally 64 cents during the month of October. Since the low posted in September, soybeans have gained 57 cents. Grossman fears this seasonal trend could wreak havoc come Thursday.

“While I want to be somewhat friendly, I am getting a little bit concerned that even if this cake has been baked for a really long time, we’ve put a lot of value back into this market. And with managed money holding onto their short position (that) could give them a good reason to defend,” Grossman said. “If all goes well, I’m hoping it’s a ho-hum report with no surprises. But the concern is growing that Thursday could be a rough day for the bean market, and ultimately spill over into corn as well.”

Grossman encourages farmers to “prepare for the worst” and make sales ahead of the report. He adds, “If Thursday were to play out rough, it might take all of October to stabilize the market again.”

“Weather is going to be a hot button item, so I would strongly encourage to take advantage of a weather rally that we may get over the next few days. I am concerned about what Thursday is going to do,” Grossman said. “If we can get even a five cent bounce here, I would strongly encourage making some sales, especially if you have bushels you know you’re going to have to store.”