What is in this article?:
- WASDE: the numbers versus uncertainty
- Uncertainty about supply
The uncertainties of both supply and demand at this time of the year are almost more important than the numbers USDA can pin to the page.
We count on USDA to publish the monthly World Agricultural Supply and Demand Estimates (WASDE) report, and we read it carefully.
But the uncertainties of both supply and demand at this time of the year are almost more important than the numbers USDA can pin to the page.
The first words in the June 9 WASDE are these: “Because spring planting is still under way in the Northern Hemisphere and remains several months away in the Southern Hemisphere, these projections are highly tentative.”
The most important unknowns are weather conditions this year; and China imports next year.
Flooding and planting delays have knocked 1.5 million acres out of expected U.S. corn plantings, but USDA has not reduced yield expectations below the long-term trend of 158.7 bushels per acre. The key unknown is July/August weather that could move actual production either way — up or down.
Concerns about high corn prices — high prices for everything — do not show up much in this WASDE as world use continues to grow for wheat, rice and coarse grains.
From a market development perspective, the dynamics of world grain markets pose a big challenge — the WASDE numbers look only one year out, and the June WASDE numbers are good only for the coming month.
How do we position ourselves for the coming 5 or 7 or 10 years of world supply and demand? What does this WASDE tell us about drivers of future demand and the need for market development efforts?