Eyes turn to WASDE, as trade expects US soy stocks to rise

On Tuesday, the USDA will releases its latest supply/demand estimate, its penultimate for 2017, with the market widely anticipating an increase in the department’s forecast for soybean ending stocks on the back of poor US export sales in the first quarter of the marketing year.

According to a Reuters survey of estimates, the average trade guess anticipates a rise in US soybean ending stocks to 438 million bushels, up 3% from the department’s November estimate of 425 million bushels, with the top estimate at 486 million, up 14%.

A Bloomberg survey showed similar expectations.

In the first three months of this marketing year, the US has exported around 37% of this year’s projected export business, according to the USDA, down from the 41-42% figure that is normally signed at this time of year.

This has led to many analysts believing that the time has come for a revision downwards on exports of soy.

“The commitments so far remain below USDA projections so if it doesn’t happen tomorrow, then it will in January, barring other factors such as a much smaller South American crop,” one trading source said.

While planting in Brazil is almost complete, with analysts revising upwards their estimates of the harvest, Argentina still only has 53% of seeds in the ground, meaning that the USDA could stay its hand on revising the stocks for a clearer picture of what is happening in South America.

According to the USDA, only twice has the USDA lowered its December bean forecast, “partly because we don’t have a handle yet on the size of competing South American crops” said Gary Crawford, a broadcaster with the department.

Nevertheless, in a radio interview with the USDA, Seth Meyer, who heads up the team in charge of the forecasts, gave nothing away.

“We’ll be looking at those things and putting those into our thoughts. Does that match what we’ve been thinking? Are we on pace, are we within the range we think we need to be? We’ll always evaluate that. Every month we do that,” he said in a USDA radio interview.

Yet while poor export sales for soy has raised expectations of a cut in stocks, a similar dynamic for corn has yet to emerge, despite export commitments for corn sales in the first three months hitting only 16% versus 23% normally.

Average trade guesses are expecting the figures to come in at 2.478 million bushels, slightly down on its previous estimate, largely due to lower production of corn in Brazil.

Both polls from the newswires showed that analysts expect the USDA to revise down their Brazilian corn production for 2017/2018 to just over 93 million mt from a previous estimate of 95 million mt.