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WASDE report: “Not as friendly” as expected

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

The U.S. Department of Agriculture’s (USDA) monthly release of its World Agricultural Supply and Demand Estimates (WASDE) report triggered a “knee jerk” reaction from grain markets.

Early forecasts suggested cutbacks to production and yield for both corn and soybeans. U.S. Department of Agriculture officials, however, relinquished slightly different results. Greg McBride, commodities broker with Allendale, says, “It was not the report everyone thought it was going to be.”

“There was a slight increase in production, for corn,” McBride said. “(It) was nothing bearish; it was more of a neutral report. Because it wasn’t as friendly, we did have a knee jerk reaction, a push lower. The same thing could be said about soybeans with a slight increase in production because of an increase in yield.”

Officials slashed corn export demand by 75 million bushels and left export demand for soybeans unchanged. Jim McCormick, branch manager of Ag Market Net, does not expect this pattern to continue moving forward.

“This China deal is the 800 pound gorilla in the marketplace. China’s committed to buy a lot of grain. If they come in and get aggressive buying beans, that could allow us to see the demand for bean exports increase, which would allow the bean carryout to drop out. The same thing (goes for) the corn side of the equation,” McCormick said. 

Additionally, USDA released its Quarterly Grain Stocks report. Officials lowered corn ending stocks and left soybean ending stocks unchanged.

“At the end of the day, it was nice to see a change to feed and residual, on the corn side. That, to me, is a good sign,” McBride said. “It doesn’t mean that we won’t see them adjust it in March, but it’s going in the right direction. You fix the export demand and (then) all of a sudden, the usage side of things looks that much better.”

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