Play Turner’s Take Ag Marketing Podcast Episode 275

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New Podcast

The USDA will release their May WASDE on Wednesday the 12th at 11am central.  The May WASDE tends to be a big report because this is the first time the USDA includes new crop supply and demand tables for new crop.  We go over the industry analyst estimates, what that means for prices, and where we could see some surprises.  The spec trade is very long, prices are high, and we have a long way to go before this new crop is made.  Make sure you take a listen to this week’s Turner’s Take Podcast!

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May WASDE Estimates

Below are the industry analyst estimates for US old and new crop endings stocks, World old and new crop ending stocks, and South American production.  Here are a few observations

* Old crop corn at 1.275 is tight and increases to exports and ethanol could be bullish. Bears will argue more wheat is being used for feed over corn so the USDA could have some wiggle room as they add export demand but take away feed demand

* Old crop soybeans will remain tight in the 120 area.  It is difficult to see the soybean numbers changing much given the current environment.

* Old crop wheat could be a little more bullish. We are hearing a lot about wheat for feed in the western corn belt.

* New crop corn at 1.344 is why new crop is so strong.  There is no room for error this summer and a trend line yield starts off at a lofty 179.5.  The USDA will most likely use the acreage number from the March planting intentions report but the trade will price in more acres as planting progresses in the US

* Soybeans are tight year over year.  Soybeans can not lose acres to corn. Soybeans need a 50 bpa national yield or higher.  There is zero room for error with this soybean crop

* South American Brazil corn production is a big wild card. It is not a question of IF the USDA will reduce Brazilian corn production but HOW MUCH.  Most in the industry think it will be 5 to 6mm mt in this report but could ultimately be closer to 10 million mts when it is all said and done

The big risk probably lies to the downside only because the spec side of the market is so long and prices have come up very fast.  Any kind of bearish surprise probably causes a big sell off.  If so I still think the breaks are bought but you never know what the USDA is going to report.  I think the grain and oilseed markets are bullish but we’ve seen some HUGE curveballs from the USDA in the past so trade with caution!  In other words, when it comes to a report like this everyone is swimming at their own risk.

Give me a call if you need some help protection your positions and risk ahead of the report. My number is 312-706-7610 or you can email me at [email protected]

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