Today, the US department of Agriculture will publish the monthly World Agriculture Supply and Demand Estimates (WASDE). This is an important document that highlights the demand and supply in the agricultural commodities around the world. Typically, these products tend to trade higher or lower depending on these estimates.
Today’s document will be very important particularly to key US agricultural products like corn and soybeans. This is because these commodities are mostly sold in China, which is engaged in a vicious trade war with the United States. Because of the sensitivity of these tariffs, the prices of these commodities has been mixed. In this article, I will highlight the recent performance of these commodities as we wait for the WASDE report.
Corn
In the United States, corn is grown mostly in the heartland states like Illinois, Arkansas, Indiana, and South Dakota. After the first US tariffs on China, the Chinese government responded by placing heavy tariffs on US corn. In the past month, the price of corn has been mixed. After falling to a low of $3.38 per bushel, the price has recently jumped to a high of $3.68 per bushel. The previous rise was because of an increased projection in the WASDE report. It reported that 14.6 billion bushels were expected, which was higher than the 356 million projected in July. Today, the WASDE report comes as more traders are bearish on corn amidst a tough trade war between the US and China.
Soybeans
After the previous WASDE report, the price of soybeans has declined from a high of $10.45 to a monthly low of $8.10. The decline was mostly because of the trade issues between US and China. The US is the biggest soybeans producer in the world while China is the biggest consumer. The planting season for US soybeans makes it impossible for China to find other sources. The decline was also because of the higher production forecasted in the previous WASDE report, which raised production estimates to 4.58 million. This was higher than that contained in the July WASDE.
Wheat
Wheat is one of the best performing agricultural crops. In August, the price reached a high of $5.91. The surge was mostly because of the WASDE report that found that supply was falling. The price then started to fall and today, it is trading at $5.22. In the previous WASDE report, the department noted that:
‘The outlook for 2018/19 U.S. wheat this month is lower supplies, greater use, and reduced stocks. Wheat production is lowered 4 million bushels to 1,877 million on a slight reduction in winter wheat and durum production as indicated by the NASS August Crop Production report. Projected food use is increased by 5 million bushels to 970 million based on the latest NASS Flour Milling Products report.’
Traders will look out for today’s WASDE and see whether there are any changes from the past estimates.
Sugar
In August, the price of sugar fell to a monthly low of $9.95. Since then, the price has climbed reaching $11.16. In last month’s WASDE, the department said the following:
‘Beet sugar production for 2018/19 is projected up 71,000 short tons, raw value (STRV) to 5.107 million based on sugarbeet area and yield forecasts made by NASS in Crop Production. Beet sugar production for 2017/18 is reduced by 34,353 STRV to 5.241 million based on higher beet pile shrink estimated for the 2017/18 slicing campaign. Based on NASS sugarcane yield and area harvested, 2018/19 cane sugar production in Louisiana is increased by 191,000 STRV to 1.781 million and cane sugar production in Florida is increased by 50,000 STRV to 2.050 million.’
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