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USDA releases “big, bearish numbers” in WASDE

Photo courtesy of the U.S. Department of Agriculture (USDA)

The U.S. Department of Agriculture (USDA) today released the May World Agricultural Supply & Demand Estimates (WASDE) report. Brian Grossman, market strategist with Zaner Ag Hedge, says, “It was a bearish one.” 

Market strategists anticipated a bearish report.

Greg McBride, commodities broker with Allendale, confirms such results in saying, “It was bearish well across the board; nothing friendly to get excited about.” Corn, perhaps, was the most bearish.

“Unfortunately, they did use a trend line yield for corn, which puts new crop ending stocks near 2.5 billion bushels. Old crop ending stocks increased by 65 million bushels, to 2.1 (billion bushels),” McBride said.

McBride believes USDA will lower its trend line yield estimate, due to planting delays.

“We will probably see USDA lower the yield estimate, from that trend of 176, and maybe lower bean yield from 49.5. Those numbers will effect overall ending stocks,” McBride said. “The one wild card is, ‘Do we get a deal with China or not?’ That will effect the exports we see, which could also lower ending stock numbers.”

Soybeans looked moderately optimistic, according to Grossman.

“One-point-seven-five billion bushels for export. One-hundred million bushels off exports,100 million bushels onto ending stocks. The next year, they’re very optimistic. (They’re) pushing crush, exports up and leaving an ending stocks at 970. That could be very optimistic.”

Despite bearish numbers, Grossman believes this report may initiate a turn in markets.

“We have all the bearish news, in the world, bearing down on us. The market has been reacting to that bearish news, but that can only hold for so long,” Grossman said. “The momentum to the downside will eventually wane as people get to positions they need, and profit taking will take place.”