In its April World Agriculture Supply and Demand Estimates report, USDA delivered the bearish news traders expected. Corn carryout is higher yet and while domestic soybean ending stocks were lowered, global supplies are still abundant.
Traders were hoping to see corn carryout below the 2-billion-bushel mark. The average trade guess was 1.991 billion bu., according to a poll from Reuters. But USDA pegged them at 2.035 billion bu., citing unchanged supply and declining use. The agency says 2018/2019 will bring lower feed and residual use, reduction in corn used for ethanol and reduced exports.
Tariffs continue to hurt grains, corn exports are reduced 75 million bushels to 2.300 billion, reflecting current outstanding sales and expectation of increased competition from Brazil, Argentina and Ukraine. Adding insult to injury, USDA expects global corn production in 2018/19 to increase 5.3 million tons.
The bright spot of the report was USDA’s domestic soybean carryout estimate. The agency projects U.S. soybean carryout to be 895 million bushels, down 5 million bushels from last month and 3 million bushels lower than the average trade guess of 898 million bushels.
Still, the global soybean carryout numbers sunk the markets following the report’s release. USDA cited increased production and lower exports as the reason for increasing world stocks to 107.36 million metric tons.
Shortly after USDA released the report, the corn and soybean markets both moved higher as attention turns to weather.
“Traders were expecting a super negative report, they got a report that had some stuff in it they were already expecting,” Angie Setzer of Citizens Grain LLC tweeted. “....so as much as I hate to say it, today's close and extended forecast will likely mean more for forward direction now.”