USDA Reports Preview

By Darin Newsom
DTN Senior Analyst

Where does one start? Usually preview discussion of USDA's July Crop Production and Supply and Demand reports is relatively simple, the numbers expected to be benign as they fall between the June 30 hullabaloo and August's initial survey hype. But this time is different. This time USDA is expected to incorporate some ominously bearish June 30 figures into their calculations, which could possibly have a tsunami effect on the markets as a large number of numbers get larger.

USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Tuesday.

Without a doubt, the corn numbers will be the most watched. USDA pegged stocks on hand as of June 1 at 4.722 billion bushels. If normal demand is seen over the fourth quarter, my analysis projects to an old-crop ending stocks figure just short of 2.3 bb. Pre-report estimates averaged only 1.784 bb with a high of 1.900 bb. Maybe this is implying a dramatic increase in demand over the next seven weeks, with the latest total export shipment number still running 3% behind pace to hit USDA's June old-crop export demand estimate of 1.825 bb. Or maybe nobody wants to pencil in the reality of a large old-crop ending stocks figure because...

June 30 also saw USDA increase planted corn area to 94.2 million acres. The average pre-report estimate left national average yield at 168 bushels per acre despite USDA'S own weekly crop condition numbers that imply something closer to 170 bpa. Production estimates averaged 14.532 bb, roughly 100 million bushels above USDA's June projection of 14.430 bb, and new-crop ending stocks at 2.189 bb. However, DTN's post June 30 analysis puts total production closer to 14.6 bb and 2016-2017 ending stocks up at 2.751 bb.

Again, demand will have to show stark improvement over previous projections, and it's possible. Beyond the U.S. borders, Brazil's crop is expected to be reduced in June's WASDE figure of 77.5 million metric tons to 74.6 mmt, with domestic estimates even lower than that. The end result of increased U.S. production and reduced Brazilian production could be a wash in global ending stocks, keeping world ending stocks-to-use at a cumbersome level near 20%.

Pre-report estimates pegged old-crop soybean ending stocks at 354 million bushels, down from USDA's June projection of 370 mb despite total export shipments that continue to run 3% behind pace to meet the current demand number of 1.76 bb. Soybean stocks on hand as of June 1 were pegged at 870 mb, implying slower-than-normal third quarter demand and an ending stocks figure near 440 mb. In its June Supply and Demand report, USDA projected ending stocks at 370 mb.

Heading into the July reports, the average soybean production estimate was 3.878 bb, up from USDA's June figure of 3.8 bb. This is due to a larger June 30 planted area figure of 83.7 ma and a slight increase in expected yield to 46.8 bpa. These numbers are in line with DTN's analysis, for the most part. Estimates were looking for new-crop soybean ending stocks to come in at 290 mb, implying much stronger demand for 2016-2017 than is currently on USDA's supply and demand tables. Using the June numbers, DTN would peg new-crop ending stocks at 400 mb. As with corn, the major difference is in old-crop ending stocks estimates.

As for the global soybean situation, old-crop ending stocks are expected to decrease slightly while new-crop increases from June's WASDE report. Little change is expected to be seen in either Brazil's or Argentina's production estimates.

And then, as always, there's wheat. The average new-crop ending stocks estimate came in at 1.1 bb, up from USDA's June projection of 1.05 bb, but in line with DTN's post June 30 reports analysis. Total U.S. wheat production is expected to increase to 2.155 bb, up from USDA's June number of 2.077 bb. All winter wheat is expected to increase 20 mb, with the balance made up by spring wheat. Not to be outdone, global ending stocks for both old-crop and new-crop are also expected to increase slightly from June WASDE figures that were already cumbersome.

U.S. ENDING STOCKS (Million Bushels) 2015-2016
	July	Avg	High	Low	June	2014-15
Corn		1,784	1,900	1,656	1,708	1,731
Soybeans		354	401	280	370	191
Grain sorghum		50	58	42	55	18
Wheat		982	1,005	980	980	752
U.S. ENDING STOCKS (Million Bushels) 2016-2017
	July	Avg	High	Low	June
Corn		2,189	2,408	1,883	2,008
Soybeans		290	359	170	260
Grain sorghum		45	49	41	43
Wheat		1,101	1,202	1,017	1,050
U.S. CROP PRODUCTION (Million Bushels) 2016-2017
	July	Avg	High	Low	June	2015-16
Corn		14,532	15,200	13,590	14,430	13,601
Soybeans		3,878	3,929	3,812	3,800	3,929
U.S. AVERAGE YIELD (Bushels Per Acre) 2015-2016
	July	Avg	High	Low	June	2014-15
Corn		168.0	169.0	167.0	168.0	168.4
Soybeans		46.8	48.0	46.4	46.7	48.0
WHEAT PRODUCTION (Million Bushels) 2016-2017
	July	Avg	High	Low	June	2015-16
All Wheat		2,155	2,219	2,077	2,077	2,052
All Winter Wheat		1,527	1,572	1,457	1,507	1,370
HRW		953	990	887	938	827
SRW		359	390	345	355	359
White		216	225	200	214	184
Spring		558	650	496		599
Durum		89	96	84		82
WORLD ENDING STOCKS (Million metric tons) 2015-2016
	July	Avg	High	Low	June	2014-15
Corn		206.20	210.00	201.00	206.50	208.41
Soybeans		71.70	72.80	70.00	72.30	78.30
Wheat		243.20	244.00	242.30	243.00	216.54
WORLD ENDING STOCKS (Million metric tons) 2016-17
	July	Avg	High	Low	June
Corn		206.00	210.80	200.50	205.10
Soybeans		67.50	73.70	64.50	66.30
Wheat		259.20	263.50	255.00	257.80
WORLD PRODUCTION (Million Metric Tons) 2015-2016
	July	Avg.	High	Low	June	2014-15
Corn
Brazil corn		74.6	77.5	71.0	77.5	85.0
Argentina corn		27.2	28.0	26.0	27.0	28.7
Soybeans
Brazil soybeans		96.2	97.0	95.0	97.0	97.2
Argentina soybeans		56.4	57.0	55.0	56.5	61.4

Darin Newsom can be reached at darin.newsom@dtn.com

Follow Darin Newsom on Twitter @DarinNewsom

(AG/BAS)

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