The report turned out to be a non-event, a market analyst said
By Diego Flammini
The USDA published its first World Agricultural Supply Demand and Estimates (WASDE) report of 2019 on Friday.
The ag industry and market analysts had heightened anticipation, as the report was the first key USDA publication since the government shutdown. But the report’s figures were mostly flat, said Abhinesh Gopal, head of commodity research with Farms.com Risk Management.
“There was a lot of hype and pre-report estimates were pointing to bullish numbers,” he told Farms.com. “The supply numbers were good, but the demand numbers were a bit of a letdown.”
The USDA published lower production numbers for corn.
The ag department lowered the average corn yield from 178.9 bushels per acre in the December report to 176.4 bu/ac.
Lower production figures could mean higher prices, but other industries don’t seem to need as much corn right now, Gopal said.
“In December we were chalking in 5.6 billion bushels for ethanol production but, on Friday, we reported 25 million bushels less than that, which is a letdown,” Gopal said. “Export numbers went untouched, mostly because the sentiment is that there will be a trade deal between the U.S. and China.”
The USDA also likes to “play it safe” and is slow to adjust to reflect potential market movement, Gopal added.
Soybean production figures also came in lower compared to December, the report said.
In December, the country’s average soybean yield was 52.1 bu/ac. The USDA lowered that number to 51.6 bu/ac in February.
Unfortunately, “it’s the same theme as corn,” Gopal said. “Production was down, but the demand wasn’t increased very much.”
In terms of commodity marketing, practicing patience might be the best strategy.
Other key USDA reports are scheduled for release soon barring another government shutdown.
Those publications will help farmers determine whether to sell or continue to store crops, Gopal said.
“Starting from now is the most important time in terms of data,” he said. “You have the USDA outlook forum in February followed by the planting intentions report in March. By that time, we’ll have a handle on acreages and that can change the outlook for corn and soybeans.”
The USDA has scheduled the next WASDE for release on March 8.