WASDE Wednesday, What Does it Mean for Crop Prices?

Is the WASDE Report too Optimistic?

By Denise Faguy, Farms.com

The USDA WASDE Report came out on Wednesday, June 11. The report reflects USDA’s initial assessment of U.S. and world crop supply and demand prospects and U.S. prices for 2014/15. There was little difference between their May and June reports, however Maurizio Agostino of Farms.com Risk Management explains before the report, the market was convinced that there was a big crop coming. He believes the report likely reinforces this belief. But he cautions, we have seen this optimism before and asks, “Will the dry weather come in and lower the yield?”

Agostino believes that markets are over-sold. He is forecasting that producers could get a “bounce on wheat and corn, but that those commodity prices will test January lows.” He says that he believes beans will be more resilient.

Agostino believes the WASDE report is a little too optimistic on both corn acres and corn yield. WASDE is projecting corn production for 2014/15 is unchanged at a record 13,935 million bushels. The projected U.S. corn yield remains at 165.3 bushels per acre - with a slightly slower-than-normal mid-May planting progress, WASDE expects this will be offset by very favorable early season crop and weather conditions.

As noted above, the U.S. crop conditions in the report are the best in 4 years for the aggregated 18 reported states and better than any time since 2007 for the Corn Belt. Therefore WASDE is projecting the range for the 2014/15 season-average corn farm price is unchanged at $3.85 to $4.55 per bushel and below this month’s lower projected 2013/14 range of $4.45 to $4.65 per bushel. The 2013/14 price range is lowered 10 cents per bushel at the midpoint based on prices reported to date and the recent decline in nearby cash and futures prices.

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