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Markets start to recover ahead of May WASDE

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It is about time for another major report.

U.S. Department of Agriculture officials Tuesday will release the May World Agricultural Supply and Demand Estimates (WASDE) report.

Markets this week presented signs of recovery. Matt Bennett, founding partner of Ag Market, says, “Things certainly look better.”

“The markets have shown some life, which has been nice to see. The crude oil market (was) up around the 24- to 25-dollar level, which has lent a little bit of optimism to the grains,” Bennett said. “You saw good corn usage for ethanol numbers, so I think the corn market feels like the low is in for the time being.”

Bennett says he will not feel comfortable with this idea until the  USDA releases its May WASDE report. Ag Market estimates old crop carryout for corn at 2.178 billion bushels and new crop carryout for corn at 3.312 billion bushels. 

“I’d say we’re on the lower end of the range for old crop,” Bennett said. “Yes, we’ve lost demand due to corn usage for ethanol. But we’ve picked up a lot of demand on feed usage and the low test weight corn is going to factor into the mix. When you go to new crop, it’s hard to find anything close to three billion or under. The reason for that is the USDA takes the planting intention acreage times the trendline yield.”

Many expect “large numbers,” which should not surprise the market, according to Bennett. Furthermore, he encourages producers to hold off on or protect sales moving forward.

“Marketing is tough because we’re so far into the insurance price, as far as corn is concerned. I think anybody making a sale needs to make sure they’re covered, in the event the market whipsaws and goes higher. It’s kind of a no man’s land type of place for selling grain. Make sure not to get too far off center,” Bennett said.