Coming up on Monday, USDA will release its monthly World Agricultural Supply and Demand Estimates report (WASDE).
This month’s WASDE is one of the most significant reports of the year, because it includes USDA’s first monthly forecasts for new-crop corn, soybeans and wheat—as well as updates to leftover stocks expected at the end of the current marketing year Aug. 31.
Arlan Suderman, Chief Commodities Economist with StoneX, says there a sense that the WASDE report for May may provide some bearish numbers.
“I think that’s contributing to the weakness in the new-crop contracts, particularly for corn, as the expectation is as we could see stocks build in this coming year,” he says. “Soybean stocks could build as well, but that’s more likely if we get an above-trend yield, whereas corn would just need a trend yield to build supplies.”
“Both remain vulnerable if we have weather problems. Right now, we just don’t have any weather problems of significance on the horizon, so I do think the trade is bracing a little bit for a possible bearish numbers from USDA,” he says.
And with recent losses, where does Suderman believe we are now with grains and oil seeds in relation to areas of chart support?
“Well if you look at July corn, we saw back in March we had a ‘double bottom’ there just above the $4.50 per bushel area, so that’s going to be a key to see if it holds,” he says. “If we go down and test that, we’ve come close now, that’s a ‘triple bottom’, which frequently does not hold. It can hold, but that’s going to be key.”
“When we look at July soybeans, we have some modest support right at about the $10.40 per bushel area that we probed a little bit, but came back above seeing if we can hold. That’s consistent with the middle-and-late April lows for the market. Beyond that, then you’re looking all the way down well below $10.00, so the bulls are certainly hoping that can hold,” says Suderman.
USDA will release its report at 12 p.m. Eastern Time on Monday, May 12.
CLICK BELOW for Arlan Suderman’s full preview of USDA’s upcoming May WASDE Report with Hoosier Ag Today’s Andy Eubank:
