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Agricultural Commodities Post-April WASDE

Summary

  • The April report does not move markets much - a comment from the founder of Teucrium ETF products.
  • Soybeans - lower supplies as the market had expected.
  • Corn - in line with expectations.
  • Wheat - another record high in global inventories.
  • Cotton and meats - some degree of support.

On Tuesday, April 10 the United States Department of Agriculture released its monthly World Agricultural Supply and Demand Estimates report or WASDE. Each month the report can cause high levels of volatility in grain and other agricultural futures markets when the data from the USDA deviates from market expectations.

The April report comes at the very beginning of the 2018 planting season in the northern hemisphere, but it comes towards the end of harvest in nations in the southern part of the world.

The markets did not move much after the USDA issued their report on Tuesday, but the markets went into and came out of the report with a bullish tone. The uncertainty of the 2018 crop year in the U.S. and other producing nations after a drought in Argentina have consumers concerned that while the world has become addicted to bumper crops, this year may not be the sixth straight year of ample supplies to feed the world.

The April report does not move markets much - a comment from the founder of Teucrium ETF products

I reached out to my friend Sal Gilberte for a reaction to the WASDE report and he told me:

The market reaction to the April 10th WASDE report was muted because it's results were largely expected and there were few significant changes from last month's report other than large declines in Argentine soy production. However, the significant takeaway from the April report should not be so much its changes versus the March report, but the projected changes in the global grains balance sheet from last year. Investors would do well to realize that total global grain output is projected to decline over 1.4% year-on-year (see page image below from today's report) while total grain use is projected to rise by just over a tenth of a percent. These don't sound

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This article was written by

Andrew Hecht profile picture
28.8K Followers

Andrew Hecht is a 35-year Wall Street veteran covering commodities and precious metals.

He runs the investing group The Hecht Commodity Report, one of the most comprehensive commodities services available. It covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (4)

c
It has not been my intention to "scalp" BO; however, for the seventh time in three months I have gone long BO. The best Ag spread of the past six months has been long Meal and short Oil. When those spreads come off BO will rally sharply and I intend to be there.
I
HI Andrew,outside of the topic ,what's your opinion for coffee I have long position on 118$, today I add more on 114,30$ I think there's good risk reward on this prices.What's your advice?
I'm in the red in sugar too , I'm thinking to add more if there's another dip below 11,93$
JGC67 profile picture
As a long term holder of ADM, your reports are quite important to me!
buddyrow4 profile picture
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