We have the WASDE update later this morning, though as WASDE reports go this should not be a major market-mover.\u00a0 Keep in mind we won’t get 17\/18 balance sheets until next month\u2019s report.<\/p>\n
Following the Quarterly Stocks report, it seems fairly obvious that WASDE will need to lower their F&R estimate.\u00a0 The debate centers on by how much?\u00a0 I think for now WASDE will probably lean towards a reduction of ~25 mil bu, though as always any F&R number is nothing more than an educated guess. \u00a0I don\u2019t anticipate any other changes to the US balance sheet.\u00a0 I know there are some that are carrying smaller export figures, but I\u2019m of the opinion commitments are strong enough to allow WASDE to remain unchanged for now.\u00a0 So, the bottom line for me is something around a 25 mil bu reduction in F&R which is pretty close to what the average guess calls for.\u00a0 No argument from me.<\/p>\n
I\u2019m not sure if we should expect any changes to the world balance sheets either.\u00a0 Next month\u2019s WASDE will be much more interesting with the introduction of the 17\/18 balance sheets.<\/p>\n
Similar to wheat, the larger than expected Quarterly Stocks figure implies WASDE will likely lower their F&R estimate.\u00a0 I\u2019m guessing the reduction could be anywhere between 50-100 mil bu from the 5,550 mil bu previously projected.\u00a0 My main question into today\u2019s report is what demand increases might offset some of this reduction?\u00a0 I think it is fairly obvious that WASDE will likely need to raise their ethanol grind again, but how much?\u00a0 I could see this being raised by 50 mil bu, which would offset all or half of the above mentioned F&R reduction.\u00a0 There is also a pretty good argument for raising the export projection as well, maybe by 25-50 mil bu.\u00a0 So with that in mind, I think the combination of changes today might result in an unchanged carryout figure.\u00a0 The average guess calls for only a very modest increase from last month, so I don\u2019t suspect this would catch many by surprise.<\/p>\n
In the world balance sheets, I think most are leaning towards bigger South American crops but WASDE is already pretty big.\u00a0 With so much more time to go on the safrinha crop in Brazil, I wouldn\u2019t be shocked to see these left unchanged today.\u00a0 Even if we do see increases in production levels, I don\u2019t suspect there will be major demand changes as these changes will likely have a greater impact on next month\u2019s 17\/18 balance sheets.<\/p>\n
The same storyline is present here\u2014a larger stocks figure likely implies a reduction in residual.\u00a0 The change should be fairly minor, probably something between 15-25 mil bu off the 33 mil bu projection last month.\u00a0 The average guess is accounting for this, showing carryout up roughly 12 mil bu from last month\u2019s report but I think that might be missing the fact that export sales and shipments have been performing better than expected over the past month.\u00a0 I think WASDE is in a rare position of needing to reverse their reduction in last month\u2019s export projection and add that demand back into the balance sheet today.\u00a0 That should largely offset the change in residual and probably should lead to a near unchanged carryout.<\/p>\n
Expectations are for a slightly larger Brazilian crop and a near unchanged Argentine crop.\u00a0 Given comments and private production estimates, I have no argument against either assumption.\u00a0 Again, keep in mind this \u201cextra\u201d supply probably won\u2019t find its way into the demand side of the ledger until the 17\/18 balance sheets are released next month.<\/p>\n
Please note this is just a small sampling of commentary available to clients.\u00a0 Please visit \n\n\n\n\n\n\t\n\t\n\t\n
