USDA Reports Preview

June WASDE: Tweaking Demand as Crops Grow

Todd Hultman
By  Todd Hultman , DTN Lead 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 Tuesday, May 12. (Logo courtesy of USDA)

USDA's new supply and demand estimates for June are apt to look familiar with a few exceptions. As coronavirus concerns ease and some dry wheat areas are spotted, there could be a few slightly bullish adjustments. On the other hand, soybean exports are once again at risk of being dialed lower. Overall, USDA's new-crop price estimates are not expected to show much change.

CORN

If there will be bullish news for corn prices in Thursday's report, it is difficult to see where it might come from. Dow Jones' survey of analysts expects USDA to estimate a 15.924 billion-bushel (bb) corn crop for 2020-21, slightly lower than USDA's current estimate of 15.995 bb. Even so, there is a good chance USDA won't change the crop estimates for either corn or soybeans until after USDA's Acreage report on June 30.

Dow Jones' survey also expects USDA to estimate old-crop ending corn stocks at 2.154 bb and new-crop ending corn stocks at 3.340 bb -- both a little higher than last month's estimates. The corn export estimate is probably safe from being changed, but ethanol demand could see another reduction.

For world estimates, the survey expects USDA to slightly increase ending stocks for 2019-20 from 314.7 million metric tons (mmt) to 315.1 mmt, or 12.40 bb. USDA and Brazil's crop agency, CONAB, estimate Brazil's corn crop at 101.0 mmt (3.71 bb). Dow Jones' survey expects a slightly lower crop for Brazil of 99.6 mmt. For Argentina, the survey expects a roughly unchanged corn crop estimate of 49.9 mmt (1.96 bb).

You may recall, due to harvest problems in North Dakota, NASS was working on a second production survey of corn and soybeans for 2019. The results will be released in Thursday's Crop Production report, and judging by how the May survey results went for other Northern states, only minor changes are expected.

USDA's current estimates of corn and soybean production in North Dakota are 455.4 million bushels (mb) and 174.4 mb, respectively.

SOYBEANS

For soybeans, analysts in Dow Jones' survey expect USDA to estimate a 4.152 bb crop in 2020, up a little from the May estimate of 4.125 bb. Old-crop ending stocks are expected to increase slightly, from 580 mb in May to 584 mb Thursday. New-crop ending stocks are expected to increase from 405 mb in May to 459 mb.

The crush incentive, based on July soybean futures contracts, is still offering a historically attractive premium, so the crush estimate will likely stay at 2.13 bb. However, the export estimate could see a reduction as U.S. soybean export commitments are down 9% from a year ago.

Analysts expect USDA's world estimate of 2019-20 soybean stocks to stay unchanged at 100.3 mmt (3.69 bb). Brazil's soybean crop estimate is expected to be trimmed from 124.0 mmt to 123.0 mmt (4.52 bb). Argentina's estimate is expected at 50.8 mmt (1.87 bb), which is a slight reduction.

Compared to more local estimates, both South American crops have room to go lower as CONAB is estimating a Brazilian soybean crop of 120.4 mmt (4.42 bb) and the Buenos Aires Grain Exchange is estimating Argentina's soybean crop at 49.3 mmt (1.81 bb).

WHEAT

So far in 2020, hard red winter (HRW) wheat prices are trading broadly sideways. In May, USDA pegged world wheat production at 768.49 mmt (28.24 bb), a new world record, as its initial estimate in 2020-21. Since then, dry weather concerns of varying degrees have emerged in the southwestern U.S. Plains, northern Europe, Ukraine and southern Russia.

According to Dow Jones' survey, analysts expect USDA to reduce its estimate of world ending wheat stocks from 310.1 mmt to 307.5 mmt (11.30 bb). If true, that would still be above last year's record ending stocks by roughly 12 mmt (440 mb), so there appears to be plenty of margin around wheat supplies.

Here in the U.S., analysts expect USDA to lower the all-wheat production estimate from 1.866 bb to 1.852 bb, a slight adjustment. HRW wheat production is estimated at 723 mb, down from 833 mb a year ago. Soft red winter (SRW) wheat production is estimated at 291 mb, up from 239 mb a year ago. A more complete estimate of wheat classes will be released in the July Crop Production report.

USDA's U.S. estimate of new-crop ending wheat stocks is expected to be trimmed slightly, from 909 mb to 904 mb. There is a good chance wheat prices will ignore Thursday's report and keep trading weather.

Just because USDA's June WASDE report is apt to show small changes, that doesn't mean there won't be any surprises. Join DTN's post-report webinar at noon CDT Thursday, June 11, as we discuss USDA's new estimates and what they could mean for prices. We will also be glad to answer questions you may have. Register now at: https://dtn.webex.com/…

U.S. ENDING STOCKS (Million Bushels) 2019-20
Jun Avg High Low May
Corn 2,154 2,303 2,075 2,098
Soybeans 584 630 497 580
Wheat 980 1,001 950 978
U.S. ENDING STOCKS (Million Bushels) 2020-21
Jun Average High Low May
Corn 3,340 3,594 3,177 3,318
Soybeans 459 684 395 405
Wheat 904 935 876 909
WORLD ENDING STOCKS (Million metric tons) 2019-20
Jun Avg High Low May
Corn 315.1 319.7 312.4 314.7
Soybeans 100.3 103.1 98.5 100.3
Wheat 294.7 296.0 292.0 295.1
WORLD ENDING STOCKS (million metric tons) 2020-21
Jun Avg. High Low May
Corn 337.6 346.6 314.0 339.6
Soybeans 100.1 118.2 96.0 98.4
Wheat 307.5 312.0 298.5 310.1
WORLD PRODUCTION (million metric tons) 2019-20
Jun Avg High Low May 2019-20
CORN
Argentina 49.9 50.0 49.0 50.0 51.0
Brazil 99.6 102.0 98.5 101.0 101.0
SOYBEANS
Argentina 50.8 51.2 50.0 51.0 55.3
Brazil 123.0 125.0 120.9 124.0 117.0
U.S. PRODUCTION (million bushels) 2020-21
Jun Avg. High Low May 2019-20
Corn 15,924 15,995 15,544 15,995 13,663
Soybeans 4,152 4,292 4,125 4,125 3,557
All Wheat 1,852 1,892 1,824 1,866 1,920
Winter 1,243 1,337 1,211 1,255 1,304
HRW 723 814 680 733 833
SRW 291 305 201 298 239
White 225 234 218 224 232

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

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Todd Hultman