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Expect More Corn in July's WASDE Report

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Thursday, July 12. (Logo courtesy of USDA)

While corn is starting to pollinate and soybeans are blooming, Thursday's World Agricultural Supply and Demand Estimates (WASDE) report is apt to show higher USDA estimates for new-crop ending U.S. stocks of corn and soybeans, but a modest reduction in ending stocks of world wheat. USDA will release the WASDE and Crop Production reports at 11 a.m. CDT Thursday, July 12.

CORN

As WASDE reports go, July tends to be an odd duck as USDA will use a weather-based model to adjust row-crop yield estimates, but stops short of getting into the kind of field observations that we have come to expect in August. Given the lofty levels seen in this year's weekly crop ratings from the National Agricultural Statistics Service (NASS), it is fair to expect yield estimates above trend in this July report. Analysts surveyed by Dow Jones agreed, expecting USDA to raise the corn yield estimate from 174.0 bushels an acre (bpa) to 175.3 bpa in July and the corn crop estimate from 14.040 billion bushels (bb) to 14.331 bb.

With a larger crop, Dow Jones expects USDA to increase its 2018-19 estimate of U.S. ending corn stocks from 1.58 bb to 1.73 bb. However, if the corn crop estimate is going up 291 million bushels (mb) as the survey says, the ending stocks estimate is likely to go higher than 1.73 bb because USDA's June 29 report showed corn demand nearly 200 mb below USDA's estimated demand pace. USDA will not dock demand by the full amount in Thursday's report, but the point is that the new-crop estimate of U.S. corn stocks has room to go higher than Dow Jones' survey anticipates.

Not all the numbers should be bearish for corn Thursday and that is where the world estimates come in. Dow Jones expects USDA to raise its estimate of world ending corn stocks for 2018-19 from 154.7 million metric tons (mmt) to 156.0 mmt (6.14 bb). The increase is not much and 156.0 mmt is still a significant reduction from the previous season's 192.69 mmt (7.59 bb). Argentina's drought started the reductions in early 2018 and now Brazil is contributing with a dry second corn crop. Brazil's corn crop estimate is expected to come down Thursday from 85.0 mmt to 83.0 mmt (3.27 bb), a 16% drop from the previous season.

SOYBEANS

After a tough six weeks of falling prices for soybeans, traders will be watching for anything different Thursday than the same old themes of U.S. crops in good condition and China not buying U.S. soybeans. However, that change is not likely to happen -- at least not in this report. The Dow Jones survey shows analysts expecting USDA to estimate a 4.33 bb U.S. soybean crop in 2018, based on a slightly higher yield of 48.8 bpa.

The survey's estimate of 507 mb of ending U.S. soybean stocks for 2018-19 is only up slightly from the 505 mb estimate in June. If there is a catch Thursday, it will probably be that the ending stocks estimate comes in higher as a result of USDA taking into account China's 25% tariff against U.S. soybeans, activated on July 6.

The main influence on USDA's estimate of world soybean stocks will likely come from adjusting U.S. estimates, as Brazil's harvest should be well known by now. Dow Jones' survey expects the estimate of 2018-19 world ending soybean stocks to increase from 87.0 mmt to 88.6 mmt (3.26 bb), but that would still be down from 92.0 mmt (3.38 bb) in 2017-18. Unless there's some surprise, soybean prices aren't likely to have much impact from Thursday's report.

WHEAT

It has been a long time since wheat prices had anything to celebrate from a WASDE report, and Thursday's report will probably be no different. However, we should see a modest reduction in USDA's estimate of world ending wheat stocks. Dow Jones' survey expects USDA to reduce its world ending wheat stocks estimate from 266.2 mmt to 264.1 mmt (9.70 bb) for 2018-19, likely related to reports of dry weather in Europe and southern Russia. If true, that would be roughly a 3% drop from the previous season, but not significant enough to give prices much of a boost.

For the U.S., Dow Jones expects to see 1.865 bb of total wheat production, which would lead to an increase from 946 mb to 982 mb in USDA's estimate of U.S. ending wheat stocks for 2018-19. Even with this year's drought in the southwestern U.S. Plains, it has been difficult to chip away at large domestic piles of wheat, while world production is on track for another big crop in 2018.

For anyone hoping for bullish news, I'm sorry to say that Thursday's WASDE report is not the best candidate, but a surprise is always possible. There will be well-deserved skepticism in Thursday's numbers as it is too early to take USDA's yield estimates seriously for row crops. On the other hand, if weather continues to be generally favorable this summer, the yield estimates in August may make Thursday's report look firmly bullish.

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Editor's Note: Join DTN Analyst Todd Hultman at 12 p.m. CDT on Thursday, July 12, as he looks at the latest USDA Production and World Agricultural Supply and Demand Estimates (WASDE) reports and what they might mean for the markets. To register, visit https://dtn.webex.com/…

2017-18 U.S. ENDING STOCKS (Million Bushels)
July Avg High Low June
Corn 2,106 2,177 2,050 2,102
Soybeans 507 532 478 505
Wheat 1,098 1,100 1,080 1,080
2018-19 U.S. ENDING STOCKS (Million Bushels)
July Avg High Low June
Corn 1,733 2,022 1,500 1,577
Soybeans 491 702 385 385
Wheat 982 1,084 924 946
2018-19 U.S. PRODUCTION (Million Bushels)
July Avg High Low June 2017-18
Corn 14,331 14,833 14,045 14,040 14,604
Soybeans 4,329 4,430 4,253 4,280 4,392
U.S. AVERAGE YIELD (Bushels Per Acre) 2018-2019 (WASDE)
July Avg High Low June 2017-18
Corn 175.3 179.5 172.6 174.0 176.6
Soybeans 48.8 50.0 47.9 48.5 49.1
2018-19 WINTER WHEAT PRODUCTION (Billion Bushels)
July Average High Low June 2017-18
All Wheat 1,865 1,923 1,825 1,827 1,741
All Winter Wheat 1,199 1,224 1,178 1,198 1,269
HRW 654 675 634 650 750
SRW 317 334 307 316 292
White 229 234 202 232 227
Spring 600 646 568 NA 416
Durum 74 83 60 NA 55
2017-18 WORLD ENDING STOCKS (million metric tons)
July Avg High Low June
Corn 191.3 193.0 188.0 192.7
Soybeans 92.0 94.0 89.0 92.5
Wheat 272.3 274.5 270.0 272.4
2018-19 WORLD ENDING STOCKS (million metric tons)
July Avg High Low June
Corn 156.0 163.0 151.0 154.7
Soybeans 88.6 92.0 85.6 87.0
Wheat 264.1 266.0 262.0 266.2
WORLD PRODUCTION (Million Metric Tons) 2017-2018
July Avg. High Low June
Corn
Brazil corn 83.1 85.0 79.2 85.0
Argentina corn 32.7 33.0 32.0 33.0
Soybeans
Brazil soybeans 118.9 120.0 117.4 119.0
Argentina soybeans 36.7 37.5 36.0 37.0
2018-19 2017-18
Wheat July June July June
European Union 149.40 151.58
FSU - 12 123.74 142.22

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

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Todd Hultman