USDA Reports Preview

On Thursday, Aug. 12, USDA will release its latest supply and demand estimates at 11 a.m. CDT. Crop estimates of corn, soybeans and wheat will get the most attention, and the stage is set for possible surprises.

CORN

For all the criticism USDA takes in its efforts to estimate crops (and I have several of my own criticisms), it is important to take a moment and grasp the difficulty of what it takes to come up with a decent estimate, especially as early as August. Private crop tours and USDA's weekly crop condition ratings have their place, but only offer limited benefit.

The main problem with corn and soybean crop estimates in August is that it is too early to be confident, and despite all its efforts, USDA's errors can add to market distortion. Producer surveys and satellite images certainly have some value but do not compare to the quality of field data in September. The August corn crop misses of 2019 and 2020 are still fresh reminders.

The inherent uncertainty in August sets up markets for possible surprises and big price moves after the report. In the past five years, the August World Agricultural Supply and Demand Estimates (WASDE) report resulted in double-digit losses in December corn three times, including a limit-down close in the wet year of 2019.

Understanding the risky terrain described above, Dow Jones' survey of analysts expects USDA to lower its estimate of U.S. new-crop ending corn stocks from 1.432 billion bushels (bb) to 1.265 bb. USDA's crop estimate is expected to come down from 15.165 bb to 14.948 bb, based on a lower yield of 177.1 bushels per acre.

Corn demand hasn't gotten much attention lately, but export activity has quieted and there is room for the old-crop export estimate to come down by 80 million bushels (mb) to 2.770 bb. Demand for ethanol has held up well, and a small increase could happen in that old-crop estimate.

World corn estimates will also get attention after Brazil's CONAB just lowered its estimate of corn production from 93.4 million metric tons (mmt) to 86.7 mmt on Tuesday, Aug. 10. Private estimates go even lower, so there is plenty of room for USDA to bring down Brazil's 93.0 mmt production estimate and 28.0 mmt export estimate.

Dow Jones' survey expects 2020-21 world ending corn stocks to be slightly reduced, from 279.9 mmt to 278.4 mmt or 10.96 bb, but a larger decline looks likely. China's corn demand estimates in 2021-22 will also get attention but may not change much in Thursday's report.

SOYBEANS

According to Monday's (Aug. 9) Crop Progress report, 72% of pods are set, a little ahead of schedule and are awaiting rain to enhance the filling process. As we approach the critical period for soybeans, the same southeast-northwest split in rain chances continues to dominate the Midwest, and many are wondering if the eastern Midwest will do well enough to make up for the losses that look inevitable in northwestern soybean states.

Dow Jones' survey expects USDA to slightly lower its estimate of U.S. new-crop ending soybean stocks from 155 mb to 151 mb. The U.S. soybean crop estimate is expected to be trimmed from 4.405 bb to 4.360 bb, based on a slightly lower 50.3-bushel-per-acre yield estimate.

U.S. soybean exports are on track with USDA's old-crop export estimate of 2.270 bb, so a big change in the demand estimate is not likely. The challenge in 2021-22 will be to see if the U.S. can produce enough soybeans to keep up with demand.

Dow Jones' survey expects world soybean stocks to be roughly unchanged at 91.5 mmt in 2020-21. In the new 2021-22 season, analysts expect a small increase in world soybean stocks to 94.8 mmt or 3.48 bb. Keep in mind, USDA estimates are midseason totals for South America. USDA currently estimates Brazil's soybean stocks will total 145 mb on Jan. 31, 2022.

For new-crop soybeans, USDA currently estimates China will import 102.0 mmt (3.75 bb) from all sources. New-crop export business has recently picked up in the U.S. with the new season ready to officially begin on Sept. 1.

WHEAT

Wheat is often a bystander in USDA's WASDE reports, willing to take its cues from corn -- but not this time. Adverse weather has become an increasing problem in 2021, spreading outside of North America. For the first time this year, USDA is apt to show a decent reduction in world wheat production in 2021-22, citing difficulties in the top four exporters: Russia, Europe, the U.S. and Canada. Dow Jones' survey of analysts expects USDA to reduce its estimate of 2021-22 world ending wheat stocks from 291.68 mmt to 288.0 mmt or 11.34 bb, below the previous year's level if true.

Here in the U.S., 2021-22 ending wheat stocks are expected to slip from 665 mb to 645 mb, the lowest in eight years if true. The Western drought of 2021 has not been kind to the U.S. wheat crop, especially white wheat in the Pacific Northwest and spring wheat in the northwestern U.S. Plains. Those crops haven't gotten any better the past month, and there is little reason to doubt analysts' lower estimates.

In the Crop Production report, analysts expect hard red winter wheat production at 807 mb, soft red winter production at 363 mb, white winter production at 193 mb, other spring wheat at 324 mb and durum at 35 mb.

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Join DTN's webinar at noon CDT Thursday, Aug. 12, as we go over USDA's latest estimates and what they mean for market prices. We're also glad to answer any questions and will post a rebroadcast link for your listening convenience. Register here for Thursday's WASDE report webinar: https://ag.dtn.com/….

U.S. PRODUCTION (Million Bushels) 2021-22
	Aug	Avg	High	Low	Jul	2020-21
Corn		14,948	15,220	14,699	15,165	14,182
Soybeans		4,360	4,455	4,273	4,405	4,135
U.S. AVERAGE YIELD (Bushels Per Acre) 2021-22 (WASDE)
	Aug	Avg	High	Low	Jul	2020-21
Corn		177.1	180.0	174.0	179.5	172.0
Soybeans		50.3	51.4	49.3	50.8	50.2
U.S. ENDING STOCKS (Million Bushels) 2020-21
	Aug	Avg	High	Low	Jul
Corn		1,098	1,186	1,042	1,082
Soybeans		147	167	130	134
Wheat		841	844	800	844
U.S. ENDING STOCKS (Million Bushels) 2021-22
	Aug	Average	High	Low	Jul
Corn		1,265	1,477	1,005	1,432
Soybeans		151	236	115	155
Wheat		645	690	590	665
WORLD ENDING STOCKS (Million metric tons) 2020-21
	Aug	Avg	High	Low	Jul
Corn		278.4	281.1	275.5	279.9
Soybeans		91.5	92.3	88.8	91.5
Wheat		290.0	290.9	288.5	290.2
WORLD ENDING STOCKS (million metric tons) 2021-22
	Aug	Avg.	High	Low	Jul
Corn		288.0	292.0	282.0	291.2
Soybeans		94.8	96.7	93.0	94.5
Wheat		288.0	290.6	280.2	291.7
U.S. PRODUCTION (million bushels) 2021-22
	Aug	Avg.	High	Low	Jul	2020-21
All Wheat		1,725	1,777	1,700	1,746	1,826
Winter		1,366	1,376	1,347	1,364	1,171
HRW		807	819	795	805	659
SRW		363	372	357	362	266
White		193	220	167	198	246
Other Spring		324	365	300	345	586
Durum		35	39	30	37	69

Todd Hultman can be reached at todd.hultman@dtn.com

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