May 2019 USDA WASDE Report: U.S. and World Grain Stocks Both Exceed Market Expectations
Category: Grains
(Seeking Alpha) – U.S.-China trade war continues to lead bearish sentiment over the markets. More favorable weather pattern for farmers and strong WASDE report add to the bearish sentiment.
The U.S. July corn futures finished Friday’s trading session down 0.71% to $3.5050, with the U.S. July soybean futures down 0.45% to $8.0838 and the U.S. wheat futures lower 1.31% to $4.2438. For the less volatile, unleveraged Teucrium ETF grain products, the Teucrium Corn ETF (CORN) finished down 0.14% ($0.02) to $14.68, the Teucrium Soybean Fund (SOYB) finished lower 0.21% ($0.03) to $14.43 and the Teucrium Wheat Fund (WEAT) also finished down 0.91% ($0.04) to $4.89. Figure 1 below is a price trend chart of the front-month July futures contract for soybeans over the past 24 hours.
July Chicago Soft Red Winter Wheat (SRW) futures were seen down 5 cents to $4.244, with July Kansas City Hard Red Winter Wheat (HRW) futures down 11.4 cents to $3.862, resulting in a bearish 38-cent premium of CBOT wheat to KCBT wheat. MGEX’s Hard Red Spring Wheat (HRSW) July contract was down $0.002 to $5.170.
On Friday, the USDA released its World Agricultural Supply and Demand Estimates (WASE) report. The May 10th report revealed that both the old and new grain stocks all exceeded USDA forecast and trader expectations. For the old crops 2018/19, the USDA recorded 2.095 billion bushels of corn stocks in the U.S. That’s compared to trader expectations of 2.055 billion bushels and USDA’s 2.035 billion bushels. For the 2018/19 soybeans, the USDA recorded nearly 1 billion bushels (0.995 billion bushels) of the soybean stock. That compares to trader expectations of 0.920 billion bushels and USDA’s forecast of 0.835 billion bushels. For the 2018/19 wheat, the USDA recorded 1.127 billion bushels of wheat stocks. That compares to trader expectations of 1.097 billion bushels and USDA’s forecast of 1.087 billion bushels.
For the 2019/20 new crop, the USDA recorded 2.485 billion bushels of the corn stock in the U.S. That’s compared to trader’s expectations of 2.131 billion bushels. For the 2019/20 new soybean crop, the USDA recorded 0.970 billion bushels of soybean stock. That’s more than trader expectations of 0.910 billion bushels. For the new wheat crop, the USDA recorded 1.141 billion bushels of wheat stock. That’s compared to trader estimates of 1.060 billion bushels.
For the world ending stocks, the USDA revealed for the 2018/19 old corn crop 325.94 millions of tons in stock. That’s compared to trader estimates of 316 millions of tons and USDA’s forecast of 314.01 million of tons. For the old 2018/19 soybeans, 113.18 millions of tons vs. traders’ estimates of 108.5 million tons and USDA’s April forecast of 107.36 million tons. For the old 2018/19 wheat, 274.98 million tons vs. traders’ estimates of 275.89 million tons and USDA’s forecast of 275.61 million tons.
For the new 2019/20 world ending stocks, the USDA found 314.71 million tons of corn stocks. That’s more than trader estimates of 304.71 million tons. For the new 2019/20 soybeans, 113.09 millions of tons vs. traders’ estimates of 109.55 million tons. For the new 2019/20 wheat, 293.01 million tons vs. traders’ estimates of 277.42 million tons.
The latest WASDE report proved that crop (new and old) inventory is strong nationally and globally. The strong supply is a bearish variable and is one of many variables led by the U.S.-China trade war that contributed to Friday’s losses.
