There were no glaring surprises in the April 2022 USDA World Agricultural Supply and Demand Estimates (WASDE) report, but still plenty of impact on global crop markets, says Joe Lardy, market intelligence and insights analyst with CHS Global Research.
“I found the report to be largely neutral at face value,” Lardy explains. “Most of the numbers came in pretty much as expected. However, we still have a tight and uncertain environment and I think the markets are really going to have a hard time doing nothing.”
“In the U.S., wheat markets saw small reductions to feed and exports that increased ending stocks. From a global perspective for wheat, we saw some small adjustments as a result of the conflict between Russia and Ukraine,” he adds.
The report also showed small changes to corn and soybean production numbers, says Lardy. On a global scale, there were further adjustments to South American crop estimates.
South American crop numbers continue to change
Dramatic cuts in projected crop production volumes in South America have been a large focus of past reports, but the April WASDE report saw that trend reverse for some crops.
“What’s interesting is that we’re finally starting to see things go in a different direction,” says Lardy. “Brazil corn numbers rose by 2 million metric tons and we could see some additional increases in the months ahead. The increase was due in large part to an extended rainy season after months of dry weather.”
South American soybean production continued to drop in the latest WASDE report, however. Brazil soybeans and Paraguay soybeans saw cuts of 2 million metric tons and 1 million metric tons, respectively, in production expectations.
Wheat market changes yet to come
As the marketing year for wheat comes to a close, expect to see even more changes in the year ahead, says Lardy.
“We haven’t seen the conflict in Ukraine impact the production side of things yet. What we’ve seen so far are small adjustments to domestic usage and exports, mainly in the affected countries of Ukraine and Russia. I think the really big production changes will come next month when the USDA releases the 2022-2023 balance sheet. That report will lay out production expectations, and that’s where we’ll see how much impact the war will have.”
Higher prices complicate crop decisions
After last month’s USDA Prospective Plantings report was released, Lardy says markets had difficulty predicting what farmers intended to plant.
“We had a whole lot less corn acres than we thought we were going to get, and we had a whole lot more bean acres than we thought we were going to get,” says Lardy. “I think we’re going to have to listen to what the producers are telling us when they’re actually in the field making planting decisions.”
Also playing a role in final planting decisions are elevated crop prices in the U.S., which have been driven by supply concerns in global markets, Lardy says. “We’re seeing soybeans priced at $16 to $17 per bushel, corn at nearly $8 a bushel and wheat over $11 a bushel, plus we’ve got really high-priced cotton. Farmers have a lot of profitable choices this year and that’s going to make planning decisions much more difficult than the last few seasons.”