Markets React to February WASDE Report with Minimal Adjustments

By Andi Anderson

The World Agricultural Supply and Demand Estimates (WASDE) report for February brought unexpected surprises, but the market response remained relatively subdued.

Despite higher ending stocks for corn and soybeans, as well as softer-than-expected cuts to Brazil’s soybean production, the impact on nearby contracts for these crops was minor. March corn saw a marginal decrease of a penny, while March soybeans experienced a modest increase of 4.5 cents. Wheat contracts, however, faced more significant adjustments, with March wheat down 13.5 cents.

By the close of markets on Friday, March and May wheat contracts had rebounded, recovering 8.25 cents and 5.25 cents, respectively. In contrast, nearby corn and soybean contracts witnessed a more noticeable downward turn, with March corn down 4.25 cents and March soybeans down an even 10 cents.

Soybeans: The WASDE report revealed substantial surprises, particularly in U.S. soybean ending stocks, which increased by 35 million bushels to reach 315 million. Brazil's soybean production was estimated at 156 million tons, down by 1 million tons due to adverse weather conditions in specific regions.

The USDA's projections for the 2023-24 season-average soybean price were set at $12.65 per bushel, a slight decrease from the previous month. Soybean exports were forecasted at 1.72 billion bushels, down 35 million bushels, reflecting a sluggish pace of shipments through January and strong competition with Brazil.

Corn: The corn outlook from USDA called for lower food, seed, and industrial use, resulting in larger ending stocks. Global coarse grain production for 2023-24 was forecasted 3.8 million tons lower. Foreign corn production saw reductions for Brazil, Mexico, and Serbia but increases for India and Turkey.

Despite these adjustments, the season-average corn price received by producers remained unchanged at $4.80 per bushel.

Wheat: The USDA projected stable supplies, lower domestic use, unchanged exports, and higher ending stocks for U.S. wheat in the 2023-24 season. The global wheat outlook included increased supplies, consumption, and trade, but lower ending stocks.

The 2023-24 season-average farm price forecast for wheat remained unchanged at $7.20 per bushel.

While the WASDE report presented surprising figures, market reactions were relatively restrained, leaving traders and analysts contemplating the implications of these unexpected developments.

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