Historically, USDA makes very few changes to supply and demand outlooks this early in the season, with the most recent exception occurring in 2012 … until today. The biggest surprises included a 4-bu. reduction in corn yield and soybean ending stocks came in at 300 million bushels, which is 100 million bushels higher than trade estimates.
For corn, the July WASDE report resulted in:
• Corn beginning stocks are lowered 50 million bushels, as greater feed and residual use for 2022/23 more than offsets reductions in corn used for ethanol and exports.
• Corn production is forecast up 55 million bushels as greater planted and harvested area from the June 30 Acreage report is partially offset by a 4-bu. reduction in yield to 177.5 bu. per acre.
• With supply rising and use unchanged, ending stocks are up 5 million bushels. The season-average farm price is unchanged at $4.80 per bushel.
• Corn production worldwide is slightly higher with increases for Canada and Ukraine and a reduction for the EU. For 2022/23, corn production is increased for Brazil but lowered for Argentina based on harvest results to date.
Davis Michaelsen chats with Matt Campbell of StoneX about the WASDE report and his market reaction.
When it comes to soybeans, the report included the following:
• Soybean production is down 210 million acres to 4.3 billion bushels.
• Harvested area, forecast at 83.5 million acres in the June 30 Acreage report, is down 4 million.
• The soybean yield forecast is unchanged at 52 bu. per acre.
• Soybean supplies are reduced 185 million bushels with lower production partly offset by higher beginning stocks.
• Soybean exports are reduced 125 million bushels to 1.85 billion on lower U.S. supplies and lower global imports.
• Ending stocks for 2023/24 are projected at 300 million bushels, down 50 million from last month.
• The U.S. season-average soybean price is forecast at $12.40 per bushel, up 30¢ from last month.
The most notable changes in the wheat sector included:
• Supplies are raised on larger production, which is up 74 million bushels to 1,739 million on higher harvested area and yields.
• 2023/24 ending stocks are forecast at 592 million bushels, 30 million higher than last month.
• The projected season-average farm price is forecast at $7.50 per bushel, down 20¢ from last month.
• Two consecutive years of drought-affected Hard Red Winter (HRW) wheat crops reduce ending stocks to the lowest level in 16 years despite decreased total use. HRW food use is forecast to be the smallest since 2010/11, while HRW exports are the lowest since by-class supply and utilization records began in 1973/74.
• Supplies are reduced 0.9 million tons to 1,066.0 million as lower global production is partially offset by larger beginning stocks.
• EU production is lowered 2.5 million tons to 138 million, as ongoing dry weather diminishes yield prospects primarily in Germany, Spain, France and Italy. The forecast for Argentina wheat production is decreased 2 million tons to 17.5 million based on revised government estimates of planted area. Dry conditions in parts of Alberta and Saskatchewan lowers production for Canada 2 million tons to 35.0 million.
• Global trade is projected down 1 million tons to 211.6 million as lower exports from Argentina and Canada are only partially offset by more exports from Russia.
• World consumption is raised 3.3 million tons to 799.5 million, primarily on increased feed and residual use in China where rains at harvest degraded wheat quality for food use.
• Projected 2023/24 world ending stocks are lowered 4.2 million tons to 266.5 million and would be the fourth consecutive annual decline.
Grains closed the day lower after the USDA report. Chip Nellinger, Blue Reef Agri-Marketing, provides analysis.
