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March WASDE figures encouraging for corn producers

March WASDE figures encouraging for corn producers

Lower production in South America could lead to market increases

By Diego Flammini
News Reporter
Farms.com

The U.S. Department of Agriculture’s (USDA) World Agricultural Supply and Demand Estimates (WASDE) report for March was good news for corn producers, according to Abhinesh Gopal, commodity research analyst with Farms.com Risk Management.

“U.S. corn usage numbers came in strong,” Gopal told Farms.com today. “That led to a reduction in ending stocks and, when you have strong usage, that means there’s more demand for that commodity. The hope is that market prices will rise.”

Some of the positive news for U.S. corn producers came from South America.

USDA reduced the Argentine corn estimate by about 3 million metric tons from February. The agency also reduced Brazilian corn production by about 500,000 metric tons.

“The USDA affirmed the fact that there’s a weather issue and a production issue in South America,” Gopal said.

The average marketing-year price for corn could fall between $3.15 and $3.55 per bushel, the USDA said.

Soybean producers could classify the March WASDE report as neutral, said Gopal.

USDA increased the country’s ending soybean stocks from 530 million bushels in February to 555 million bushels in March.

The 25 million bushel increase in the U.S., paired with a lower South American soybean crop due to drought conditions, created a stagnant report for soybeans.

“From the American point of view, the report was bearish, but from a global soybean perspective there was some price supportive news,” Gopal said.

The average marketing-year price for soybeans could fall between US$9.00 and US$9.60 per bushel, according to the USDA.

When it comes to wheat, the WASDE report showed the markets are in a weaker position, according to Gopal.

The USDA increased wheat ending stocks from 1.009 billion bushels in February to 1.034 billion bushels in March. That increase was higher than markets expected, Gopal said.

“Markets were expecting an increase to 1.015 billion bushels,” he said. “The world wheat carryout also increased, so it was like a double-whammy for wheat farmers. That will put pressure on the markets.”

The average marketing-year price for wheat could fall between US$4.60 and US$4.70 per bushel, according to the USDA.

If producers are looking to market their crops, they should exercise caution, Gopal said.

“It’s still early, but there are positive signs for market price rises, especially in corn and soybeans,” he said. “Analysts continue to reduce the South American crops, which is price-supportive for those two crops. And for wheat, the U.S. Plains are in a drought, which can be a good thing in terms of market prices.”

The next WASDE report will be released on Apr. 10.

For exclusive access to Gopal and Moe Agostino’s live monthly WASDE analysis and other risk management services, sign up for a free eight-week trial.