WASDE update: Maintaining the status quo

The USDA made no revisions to its US corn balance for 2020/21, with domestic production and ending stocks left unchanged at 14.18b bushels and 1.5b bushels, respectively. In the lead up to the release, market expectations were that ending stocks for the current marketing year would be revised down in the region of 30-40m bushels, leaving them at around 1.46-1.47b bushels.

Meanwhile, global ending stocks were revised marginally higher from the February report, with the USDA increasing ending stocks for 2020/21 by a little more than 1.1mt, leaving them at 287.67mt. Expectations were for a slight revision lower, with the market expecting global ending stocks somewhere around 284mt.

Similarly for the US soybean balance, the USDA left it unchanged this month. This means that domestic ending stocks were left at 120m bushels, however the market was expecting a slight revision lower to somewhere in the region of 117m bushels.

Global ending stock estimates for soybeans this marketing year were increased by just 380kt to 83.74mt. Expectations were that ending stocks would be in the region of 82.65 and 82.9mt. The revisions higher were due to higher opening stocks, as well as a 1mt revision higher in the Brazilian production estimate. The USDA is now expecting that the Brazilian crop will total a record 134mt, while the market was expecting this estimate to remain unchanged at 133mt. However, there is downside risk to the Brazilian crop, with rain during the harvest raising concerns over quality and yields.

The WASDE report was moderately more constructive for the wheat market, with the US wheat balance also seeing no changes, with ending stock estimates for 2020/21 left unchanged at 836m bushels. The market was expecting ending stocks to be revised higher to somewhere in the region of 838-839m bushels.

The global wheat balance was also mildly supportive, with the USDA revising lower 2020/21 ending stock estimates from 304.22mt to 301.19mt. Heading into the release, the market was expecting stocks to remain largely unchanged. While the USDA revised higher its expectation for the Australian wheat crop from 30mt to 33mt, Chinese domestic demand was increased by 5mt. This increase in Chinese domestic wheat consumption is driven by stronger feed demand, something which should not be too surprising, given the strength that we have seen in the domestic corn market.