Analysts forecast bearish WASDE

by | Apr 8, 2020 | 5 Ag Stories, News, Uncategorized

U.S. Department of Agriculture (USDA) officials tomorrow will release the monthly World Agricultural Supply and Demand Estimates (WASDE) report. Experts anticipate increases to domestic and global ending stocks.

The “next big thing” the trade must take into consideration is the April World Agricultural Supply and Demand Estimates report, shares Jim McCormick, branch manager of Ag Market. He also makes note of the latest Grain Stocks report being factored in.

“What they’re going to do is make demand adjustments based on the quarterly Grain Stocks report,” McCormick said. “We look for the feed and residual number to be improved, but offset by a drop in ethanol demand.”

Analysts estimate U.S. corn ending stocks at 2.004 billion bushels, up from 1.892 billion bushels and U.S. soybean ending stocks at 430 million bushels, up from 425 million bushels. New crop numbers will not be accounted for in this report, which McCormick believes will come with a “negative skew,” due to lack in ethanol demand.

“GasBuddy said gasoline demand has dropped by 50-percent from where it was last quarter. That gives you an idea of the demand destruction we’ve seen in the energy market, which has given us a negative impact on the ethanol market,” McCormick said.

Tomorrow’s bearish outcome will be the outlook for corn heading into spring, shares Greg McBride, commodities broker with Allendale, Inc.

“The ethanol and crude oil situation doesn’t bode well for much higher prices. There is still a silver lining that maybe the weather helps us or we get past the worse of COVID-19. Once we get past that, we need to be looking at sales,” McBride said.

McBride, however, sheds light on another situation playing out Thursday, which could help crude oil prices. The Organization of the Petroleum Exporting Countries, otherwise known as OPEC, plans to hold a meeting with its allied nations.

“They’re looking to strike a deal with the U.S. and Russia,” McBride said. “If we can come to an agreement on cutting back production worldwide, that will start to ease the supply side. Then we need to get back to the demand side of things, so we can start to use this glut of crude oil, heating oil, and RBOB gas before we can see prices start to move back up to where they should be,” McBride said.