Agricultural commodity futures are in the spotlight ahead of the release of a key report that could provide traders directional cues. The World Agricultural Supply and Demand Estimates (WASDE), prepared by the World Agricultural Outlook Board (WAOB), is scheduled to be released on Friday at 12 p.m. EST.
The monthly report is compiled based on data from statistical reports produced by the United States of Department of Agriculture (USDA) and other government agencies.
What Will Stocks Reveal? The projected end-of-January stock for the three main agricultural commodity futures, namely soybean, corn and wheat were at 350 million bushels, 2.227 billion bushels and 926 million bushels, respectively.
An Agriculture.com report, citing Grain Market Insider, stated that rising exports and slightly higher ethanol production will likely lead to lower estimated corn stocks in February. Soybean stocks will likely remain unchanged, underpinned by lower exports and higher crush. As far as wheat stocks are concerned, Grain Market Insider expects lower ending stocks due to rise in export demand.
Reduced stocks are typically bullish for near-term futures contracts, resulting in backwardation, a situation where near contracts are priced higher than later-dated contracts.
Other Focal Points: Futures Traders may also sift through metrics such as:’
- yields of the agricultural commodities
- Planted and harvested acres
- Exports & imports
- Domestic use, feed demand etc
- Stocks-to-use ratio
For soybean and corn, production estimates for South American countries such as Brazil and Argentina and China demand is also a vital input for futures traders.
Commodity futures muted ahead of WASDE report:
- The standard corn futures (ZC) traded on the Chicago Board OT exchange were little changed Tuesday morning.
- The Soft Red Winter Wheat futures (ZW), the standard wheat futures contract, fell 0.28%.
- The standard Soybean futures contract (ZS) moved down 0.16%.
Soybean futures have started the new year on a firmer footing, having gained more than 6% for the year-to-date period. ZW is up over 4%, while ZC has slipped 2%.
Source: TradingView
Will the February report move the market? The February report does not move the market in a meaningful way, given it comes after the USDA’s final Crop production report in January, Profarmer.com reported. Therefore the supply side of the equation may not alter much.
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