by Darin Newsom, DTN Senior Analyst
OMAHA (DTN) — USDA's April Supply and Demand report isn't expected to generate many headlines, historically being an opportunity for fine tuning following the March Quarterly Stocks report and prior to the “first” look at new-crop in the May Crop Production report.
USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Wednesday.
CORN
The corn market could take back its starring role from soybeans, even if it is in a lesser play known as the April Supply and Demand report. The pre-report average estimate for domestic ending stocks came in just over 1.4 billion bushels, well below USDA's March projection of 1.456 bb. The 1.4 bb estimate is interesting given the Q2 stocks report of 7.0 bb. Using 15-year average demand (percent of total supplies) over the last half of the marketing year (March through August) would project to an ending stocks figure of 1.475 bb. This is in line with the high side of pre-report estimates (1.478 bb). Keep in mind that as of late March, total export shipments were running about 5{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e} behind the projected pace to reach 1.625 bb. If exports finish about 1{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e} behind USDA's projection, it would add the 15 mb to 20 mb to ending stocks implied by analysis following the Quarterly Stocks report.
SOYBEANS
The domestic soybean ending stocks situation is tight and expected to draw a little tighter, according to pre-report estimates that averaged 139 mb. While this is below the 145 mb USDA projected in March, it is still well above what post-Quarterly Stocks report, analysis showed. Using USDA's Q2 stocks figure of 992 mb, and using second-half demand figures similar to what was seen in 2003-2004 of 30.1{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e} of total supplies, domestic ending stocks would be calculated at (-50) mb. As we all know, that isn't realistic. But neither is a number near the 140 mb range, unless something dramatic happens to demand soon. Total export shipments in late March were at 97{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e} of USDA's projected 1.53 bb, 13{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e} ahead of average pace. Total sales were reported at 1.635 bb — commitments the U.S. does not have stocks to fill. USDA might increase its export number slightly, but don't look for anything dramatic in April. It would make more sense for a larger change to occur in May when all the attention is on the release of the “initial” look at the 2014-15 crop.
WHEAT
The April Supply and Demand report is a “'tweener” for wheat with estimates projecting numbers through the end of May while traders have turned their attention to new-crop issues. Still, the pre-report average estimate of 581 mb (domestic ending stocks), if realized, could be viewed as bearish given it is a slight increase from the 558 mb USDA projected in March. It would not be surprising to see export demand trimmed given the recent slowdown in U.S. movement, due in part to Canada finally thawing out. If the 13 mb increase in domestic ending stocks is seen, and if it is caused by a like cut in exports, it would mean a 1{0a3336b3da8cf935de4f3eb78fe29508c4b8b5ebd27d01af2d815614325d533e} decrease in projected export demand through the end of the marketing year. This seems to be a reasonable possibility.
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Posted with DTN Permission by Haylie Shipp
