What Farmers Need to Know Before the February WASDE Report

The February World Agricultural Supply and Demand Estimates (WASDE) report is due Tuesday, Feb. 11. Going into the report, here is what farmers need to know about the corn, soybean, and wheat markets, and what Grain Market Insider will be looking for in the updated balance sheets. 

Corn Market Expectations

January’s WASDE report offered surprisingly good news to corn and soybean bulls. 

Corn carryout for 2024/2025 was lowered more than expected due to a sharp decrease in yield to 179.3 bushels per acre (bpa) from 183.1, versus expectations of 182.7 bpa. This was partially offset by lower demand estimates for exports and feed that totaled 75 million bushels. The net result was a carryout estimate of 1.540 billion bushels, 198 million bushels less than the December projection, and 135 million lower than the average trade guess.

Since then, demand has remained strong, with export sales continuing to exceed the USDA’s projected pace. Total sales commitments are at 69% of the USDA’s current forecast for the marketing year, compared to the five-year average of 60%. Ethanol production remains strong as well, suggesting a final usage near 5.6 billion bushels versus the USDA’s current estimate of 5.5 billion. With the uncertainty in regard to trade, it’s impossible to know if or how the USDA will take that into account.

Based on the known numbers from the USDA today, Grain Market Insider expects an increase in export demand of 25 million bushels and believes a 25 million bushel increase for ethanol is also possible. The net result could be a 2024/2025 carryout estimate between 1.490 and 1.515 billion bushels. That said, the uncertainty can’t be ignored. If the USDA decreases demand, carryout could increase.

Soybean Market Outlook

Ending stocks for 2024/2025 soybeans also came in below expectations on the January report at 380 million bushels. The average yield estimate was lowered from 51.7 bpa to 50.7, well below the average guess of 51.6. Demand was left largely unchanged, which resulted in stocks decreasing from 470 million bushels in December to 380 million bushels, well below the average trade guess of 457.

Export commitments for the 2024/2025 marketing year remain firm and are ahead of the pace needed to meet the USDA’s goal. Normally, total soybean sales by this time of year are near 81% of the USDA’s projection. As of Jan. 30, total commitments were 86% of the current estimate of 1.825 billion bushels. This implies the USDA may be underestimating export demand, and could adjust the number higher.

With the recent trade uncertainty, and the propensity for the pace of exports to slow sharply between now and the end of February, Grain Market Insider’s guess is carryout for the 2024/2025 crop will be unchanged or up to 25 million bushels lower on next week’s report.

Considerations for the Wheat Market

On the January report, the USDA left 2024/2025 U.S. wheat ending stocks near unchanged at 798 million bushels.

Export sales have remained steady since last month’s report. The current sales pace of 78.5% sold is slightly behind the five-year average of 80.5%. The current pace of inspections is 60.6% of the current estimate compared to the five-year average of 61.6%.

Historical Patterns and Statistical Perspective

Based on data from 2000–2023, Grain Market Insider’s internal research indicates that volatility on February’s WASDE report day tends to result in more negative market reactions for corn while soybeans and wheat have a 50% chance of being up or down. 

For corn, the February report tends to have a negative reaction 59% of the time. In terms of outright volatility, this report ranks 11th out of the 12 WASDE reports, with an average absolute change of 4¢. When examining upward or downward moves, the average positive net change on report day is 5¢, while the average negative net change is 3¢.

For soybeans, the February report ranks slightly higher in outright volatility than for corn, being the 10th most volatile of the 12 WASDE reports. In terms of bullishness versus bearishness, the February report for soybeans has a 50-50 chance of triggering a positive or negative reaction. When the reaction is positive, the average bounce is 9½¢ compared to an average decline of 9¢ if the reaction is negative.

Lastly, for wheat, the February WASDE report volatility ranks 12th in terms of volatility among the 12 reports, with an average net change of 6¢. When broken out by positive versus negative reactions, the odds are also 50-50. Positive reactions average a 4½¢ gain, while negative reactions yield a slightly larger 8½¢ loss.

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About the Author: Eric Fransen is the Director of TFM360 Market Analytics at Total Farm Marketing. Eric’s calm, confident, and reasonable approach to farm marketing has been a safe harbor to his clients and the Grain team alike since 2003, making him a welcome person to turn to in an often unsettled market. Eric enjoys breaking down and explaining complex concepts and strategies to farmers as he helps them make decisions to help improve their bottom lines.