Latest USDA supply-demand report delivers few surprises in key commodities

The U.S. Agriculture Department delivered few surprises in its monthly crop and world agricultural supply-demand reports, keeping U.S. corn and soybean supplies tight but raising global soybean and wheat stockpiles from a month ago.

The Argentine soybean and corn crops were both lowered by drought, USDA said. Projected soybean output was trimmed by three per cent, to 51.5 million tonnes, and the corn crop by two per cent, to 26.5 million tonnes. Analysts had expected slightly deeper cuts.

U.S. soybean end stocks were forecast for 125 million bushels, the smallest in nine years and a thin two-week supply when the new crop is ready for harvest — but unchanged on the month.

“(I was) a little surprised about USDA’s decision to keep their numbers unchanged for soybeans. At a minimum, the trade was 100 per cent certain of an adjustment on exports. The way this South American situation looks, we would expect further gains for U.S. sales,” said Rich Nelson, director of research for Allendale Inc.

USDA analysts noted that although the U.S. soybean export sales and shipments pace has been brisk so far this season, they expect demand to drop off significantly once new-crop supplies from Brazil and Argentina hit the market.

Corn ending stocks were also forecast steady on the month at 632 million bushels, the smallest in 17 years and a bare three-week supply.

USDA cut its estimate of corn exports by 75 million bushels but said larger production of beef and poultry will increase demand for corn for feed.

Brazil was forecast to reap a record 83.5 million tonnes of soybeans. USDA stood by its forecast, although Brazil’s forecasting agency lowered its estimate to 82.1 million tonnes this week.

USDA raised its forecast of world wheat ending stocks by one per cent, or 1.5 million tonnes, to 178.2 million tonnes, due to larger stockpiles in India, the United States and Iran.

“World (wheat) supplies are growing. The market has priced in more wheat production coming, and that’s definitely going to weigh on prices,” said Sterling Smith, futures specialist at Citigroup.

USDA has projected record corn and soybean crops if weather and yields are normal, bouncing back from the severe 2012 drought. An influential U.S. think-tank, FAPRI, made similar projections March 8.

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