Three takeaways from the last WASDE report of 2018 (and one glaring omission)

The USDA released today their world agricultural supply and demand estimates. Three trends are particularly notable for their impact on commodity prices going forward: 

  1. Growing South American soybean crop: Brazil soybean production was revised upward; yet not significant enough to change the projected U.S. price.
  2. Wheat market still holding up:  higher wheat prices were expected to push supply upward, but production challenges in some parts of the world are limiting the downside price risk.
  3. Livestock production forecasted to climb: projections seem reasonable given futures markets remain optimistic about state of demand for red meat.

One market driver is absent from the report: progress towards a permanent commercial truce between the U.S. and China will likely drive most of the movement in commodity prices over the next few months. That’s the most important trend to monitor for crops and livestock.

J.P. Gervais
Vice-President and Chief Agricultural Economist

J.P. is the Vice-President and Chief Agricultural Economist at Farm Credit Canada. Prior to joining FCC in 2010, J.P. was a professor of agricultural economics at North Carolina State University and Laval University. He also held the Canada Research Chair in Agri-Industries and International Trade at Laval. J.P. is Past-President of the Canadian Agricultural Economics Society. He obtained his PhD in economics from Iowa State University in 1999.