March Supply and Demand Report Reduces U.S. Ending Stocks for Corn, Soybeans

Monday’s World Agricultural Supply and Demand Estimates (WASDE) has had a significant impact on crop markets. Corn production remained unchanged at 13.925 billion bushels but ending stocks are reduced to 1.456 billion bushels, slightly lower than pre-report estimates of 1.487 billion bushels. The decrease in ending stocks is a result of a 25 million bushel boost in corn exports. On the global stage, production was revised up by almost 900 thousand metric tons with 730 thousand of that coming from an increase in Chinese production. Global ending stocks are up 1.17 million metric tons from last month’s estimate. Pre-report estimates were expecting Brazilian production to be revised down by almost 4.5 million metric tons, but actual numbers remained unchanged.

There were no changes to the U.S. wheat supply and demand estimates. Global production was increased, mainly due to a 1.1 million ton boost in production from India and a 0.5 million ton increase in Australian production. An increase in global demand for wheat, mainly from the Middle East, offsets the increase in production, leaving only a small increase in global wheat ending stocks.

Soybean ending stocks were revised down by 5 million bushels in the March WASDE report. Pre-report estimations were expecting soybean ending stocks of around 141 million bushels compared to the actual 145 million bushels. Soybean exports were raised by 20 million bushels to a record 1.53 billion bushels, a result of continued strong sales through the month of February. Domestic soybean crush was reduced by 10 million bushels, partially offsetting the increase in exports. Global soybean production was reduced by 2.26 million metric tons, with most of that coming from a 1.5 million ton decrease in Brazilian soybean production. Global ending stocks were decreased by 2.37 million metric tons.

On the surface, it appears as if the report should be slightly bullish but when factoring in pre-report expectations it was actually a bearish report. While U.S. exports for corn were very strong resulting in lower domestic ending stocks, global production was much higher than expected. This is particularly true for Brazilian production. Similarly, U.S. soybeans exports are at a record high, but the estimate is still lower than expected. Brazilian soybean production was also 430,000 metric tons higher than expected. What this ultimately means is that although the U.S. numbers in this month’s WASDE report were slightly bullish, the global numbers overshadowed the positive domestic numbers and the crop markets are adjusting accordingly.