WASDE Recap
- No major changes were made to US balance sheets.
- Market expectations were for lower US corn stocks likely on higher corn exports, but USDA may have been hesitant given the volume that still needs to be shipped.
- USDA trimmed Argentina’s soybean production by 0.5 million tonnes but raised Brazil’s production by 1 million.
- USDA held Argentina+Brazil corn production despite concerns in both countries due to weather.
- Global wheat production was raised with USDA adopting ABARE’s production total for Australia.
- But, global wheat use also was raised, primarily on a five-million-tonne increase in feed use for China.
- US Cotton exports were left unchanged versus a 100,000–250,000 bale increase expected, while production decreased 100,000 bales.
FBN’s Take On What It Means: The market did not get overly excited about the reports with beans closing higher for the day. CONAB’s report, scheduled for Thursday, will be closely watched. USDA did restate its opinion of tightening global stocks for major commodities, year over year. Overall, that leans supportive to the grains complex.
China ASF Concerns Remain
- New African Swine Fever outbreaks have been reported in China, Vietnam and Malaysia this year.
- The latest outbreaks include new variants that are milder but harder to detect.
- Producers have to rely on strict biosecurity measures with no commercial vaccine available yet.
- China’s farm ministry has had to crackdown on illegal vaccines that have been linked to the emergence of new strains.
- It has been estimated the decrease in hog breeding capacity will be limited to at 10% this year because the disease is confined to northern regions.
- China’s pork prices have begun to rise again, while corn and soymeal prices have slipped from recent highs.
- Vietnam has culled about 2,000 pigs this year through February, and Malaysia culled 3,000 after its first ever ASF outbreak last month.
FBN’s Take On What It Means: While the new ASF outbreak is not yet as severe as the last, it casts some doubts over the government goal of achieving a full herd recovery by June. There have been reports of China asking Brazil to delay loading soybean cargoes until the summer, which has increased speculation about ASF outbreaks in the past month or two being worse than expected. The potential for new strains to spread through the region and the effect on feed demand will be monitored.
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