April Supply and Demand Report Recap

Soybeans

U.S. ending stocks for soybeans remained unchanged in the April World Agricultural Supply and Demand Estimates (WASDE) report at 125 million bushels. Analysts were expecting the ending stocks number to be 137 million bushels, with a range from 107 to 160 million bushels, given the slightly higher quarterly stocks number from last month that indicated demand had been slipping. Soybean crush and exports were both revised up slightly from last month’s report, however those changes were offset by an equal decrease in residual use. Given the offsetting changes, the stocks-to-use ratio remained unchanged at 4.1%. Soybeans futures were largely unaffected by the report with the nearby May contract closing down 2.6 cents at $13.92/bu.

Corn

USDA’s April projections of U.S. corn ending stocks for the 2012/13 marketing year were pegged at 757 million bushels, 135 million higher than March projections. This was, however, lower than the average pre-report expectation of 824 million bushels, but following last month’s surprising Grain Stocks number analysts were all over the board with guesses for this month’s WASDE ending stocks (expectations ranged from 625 to 925 million bushels). Much of the difference comes from the 150 million bushel decrease in projected feed and residual use, although industrial use and ethanol use were both revised higher. Corn exports were projected to be 25 million bushels lower compared to last month’s projections. With many traders still recovering from the shock of the stocks report a couple of weeks ago and thus uncertain of where USDA would peg this month’s number, it is unsurprising that corn futures markets had a minimal response to the latest WASDE report. Corn’s stocks versus use currently sits at 6.8% compared to 5.6% last month. Global corn ending stocks were raised to 125.29 million metric tons, with the U.S. and China each accounting for 40% of the increase. May Corn contracts finished up 4.6 cents today at $6.49/bu.

Cotton

Supply and demand estimates for cotton, while not mundane, were largely in-line with last month’s projections. Interestingly yield was raised 14 pounds per acre to 880 based on information from the final Cotton Ginnings report. This was partially offset by an increase in demand. Exports were raised 250,000 bales to 13.0 million. Ending stocks remained unchanged at 4.2 million bales and the ratio of stocks versus use is now at 25.6% compared to 26.0% last month. Analysts had expected the ending stock number to drop to 4.1 million bales due to the higher pace of exports, but the larger yield appears to have not been accounted for. Global cotton ending stocks were raised to 82.45 million bales, up from 81.74. China’s ending stocks are currently projected at 45.61 million bales, up 1.5 million due to increased imports, and therefore they now account for 55.3% of total world ending stocks. Cotton futures still managed to end the day higher with the nearby May contract ending the day at 85.37 cents/pound, up 0.73, and December ended at 86.57 cents/pound, up 0.78.

Wheat

Today’s WASDE report appears to have had the most significant impact on the wheat market. Ending stocks for all wheat were revised up 15 million bushels compared to last month at 731 million bushels. The additional bushels are a result of lower feed and residual use than expected, however all other numbers remained unchanged. The higher than expected wheat ending stocks pushed the May wheat contract down 12 cents on the day to close at $6.96/bu

Rice

All rice ending stocks projections were raised to 34.1 million hundredweight, up from 29.1 last month. The increase stems from larger long- and medium/short-grain stocks, but with long-grain getting the bigger bump. Domestic demand is the culprit of the higher stocks; with this number decreasing from 125 million hundredweight in last month’s report to 120 projected this month. Rough rice futures ended mildly lower on the day with the nearby May contract closing at $15.675/cwt, down 3 cents/cwt, and the September contract finished at $15.42/cwt, down 4.5 cents/cwt.

— Dr. Brian Williams contributed to the article —