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4 demand factors to watch in this Friday’s WASDE report

Will ending stocks shrink or grow as the growing season begins?

Naomi Blohm, senior market adviser

April 7, 2022

5 Min Read
ship loaded with corn

The April USDA WASDE report usually includes a few surprises. Some years the surprises have been bullish and some years the surprises lean bearish.

In our current marketplace with tight ending stocks for nine grain and oilseed commodities, it seems unlikely that many surprises could occur with Friday’s report, with most supply and demand related items currently “known.”

Part of me feels that the bigger surprises would be best left to Mother Nature later this spring or summer. Regardless, the demand categories will be scrutinized on Friday, and ultimately trade will be eager to see if ending stocks are getting smaller or growing ahead of key U.S. production in just a few weeks. Here are the key components I’m watching for on Friday’s report:

Corn demand for ethanol

As of this week, it is estimated that corn use for ethanol is near 3.158 billion bushels, which is up nearly 9% from a year ago, and well on its way to meet the USDA goal of 5.35 billion bushels for the 2021/22 crop year.

My curiosity is if the corn use for ethanol will increase on this report. Even with high gas prices, I have not seen anyone really cut or change their driving patterns to reduce gas consumption. People have things to do and places to go, and so far, gasoline demand looks strong, and will likely stay strong as we head into the key summer driving window. Also, many members of congress have been encouraging the EPA to expand the use of E15 in the nation’s fuel supply to help offset rising fuel costs.

Corn demand for export

In the March WASDE report, the USDA did increase corn use for export demand. In February, the export number was pegged at 2.425 billion bushels, and that was increased to 2.5 billion bushels on the March report. Currently, U.S. corn export sales on paper are at 84.5% of the USDA forecast already, versus a five-year average of 81%. Corn export inspections (what has actually left the country) are near 46%, versus the five-year forecast of 48%.

Earlier this week we saw China step up and purchase 1.084 million tons of U.S. corn, their largest purchase in nearly a year, as the war in Ukraine has forced them to purchase from the United States instead. USDA said the deal was for 676,000 tonnes of corn to be delivered in the 2021/22 marketing year that ends Aug. 31 and for 408,000 tonnes to be delivered in 2022/23. So my question is if this large purchase was already factored in when the USDA raised corn exports for the March report (expecting that the U.S. would likely see more export business due to the war in Ukraine), or will this purchase be justification to once again increase corn exports for this Friday’s report.

Sorghum demand for export

Citing the war in Ukraine and lower production of grains likely expected for Ukraine this growing season, I wonder if export demand for sorghum will increase in the coming months as the world looks to source more feed. Current U.S. production of sorghum is pegged at 448 million bushels, and exports are pegged at 310 million bushels. So nearly 70% of the sorghum grown in this country is exported. Sorghum ending stocks are already snub coming in at 33 million bushels, albeit larger than last year’s final number of 20 million bushels.

Soybean demand for crush

The current soybean demand for crush is portrayed at 2.215 billion bushels, unchanged from the February number, yet higher than the January number of 2.190 billion bushels. Demand for soybean oil and soybean meal has been strong, due to the smaller soybean crop in Argentina, and demand is expected to get stronger.

With new crush plants and renewable diesel facilities opening soon, crush demand is expected to increase dramatically into both year-end 2022 and into 2023. Total production for soybeans at 4.435 billion bushels for the 2021-2022 crop year, and essentially half of that goes to the crush.  

For Friday’s report, demand is important to watch. After that, the trade will quickly turn to see how much of the crop is actually getting planted in Ukraine, and how the weather is faring in the United States for our growing season.

Reach Naomi Blohm at 800-334-9779, on Twitter (@naomiblohm) and [email protected].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involves significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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