USDA WASDE – A Close Shave With Dearth
We’ve just released our take on the USDA’s January 2021 WASDE, Winter Wheat Seedings, and Quarterly Stocks of Grain reports. Here are the main highlights: The USDA’s seemingly unending cuts to US G&O supplies continued this month, and with soybean and corn stores particularly bare, it seems only a matter of time before cuts shift to demand. Dryness in South America, the US, and the Black Sea are threatening a badly needed resupply of grains and oilseeds, heaping pressure on US reserves and pressing products like soy and corn to the raw edge of rationing. Commodity risks are fraught over the coming few months, with Argentine corn under particular stress. US corn and soy yields look vulnerable, and supplies will remain under heavy strain to meet record global demand, led by China. There is little room in the balance sheet to digest supply errors, even with maxed out acreage. Spring acreage will be incredibly competitive, and ultimately, supply replenishment is likely to fall short of consumer wishes.