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USDA Faces Limited Production in July

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 on Monday, July 12. (USDA logo)

On Monday, July 12, USDA will release its latest supply and demand estimates at 11 a.m. CDT. Changes in July are apt to be small and, given USDA's lower-than-expected planting estimates from June 30, U.S. production possibilities will be limited.

CORN

Now that we've seen USDA's Acreage and Grain Stocks report from June 30, important pieces of this year's production puzzle are in place and future possibilities are limited moving forward. In the case of corn, USDA's 92.7-million-acre planting estimate is higher than the 91.1 million acres USDA started with, but not nearly as high as some were expecting.

Dow Jones' survey of analysts expects USDA to estimate 15.007 billion bushels (bb) of corn production in 2021, based on a little lower yield of 178.0 bushels per acre (bpa). I agree corn deserves a lower yield estimate, but I'm not convinced USDA will change its 179.5 bpa estimate, as it is early for the kind of hard evidence USDA prefers.

Dow Jones expects USDA to reduce old-crop ending U.S. corn stocks from 1.107 bb to 1.091 bb Monday and to reduce new-crop corn stocks from 1.357 bb to 1.309 bb. China has already bought 423 million bushels (mb) of new-crop corn from the U.S. and it will be interesting to see if USDA increases its export estimate of 2.45 bb. Ethanol demand in the current season is an entry with room to go 50 mb higher.

Brazil's corn crop has run into a buzzsaw of problems this year. First, the second corn crop was afflicted with a lack of rain soon after planting. More recently, subfreezing temperatures damaged crops in southern Brazil. On Thursday, Brazil's official crop agency CONAB lowered its estimate of Brazil's corn crop from 96.4 million metric tons (mmt) to 93.4 mmt or 3.68 bb. USDA's production estimate for Brazil currently stands at 98.5 mmt and has room to come down to 91.5 mmt or 3.60 bb, according the average estimate of analysts in Dow Jones' survey. Argentina's corn crop estimate may be tweaked higher, from 47.0 mmt to 47.5 mmt.

Overall, Dow Jones expects USDA to lower world ending corn stocks for 2020-21 from 280.6 mmt to 278.4 mmt or 10.96 bb. Traders will also be watching for a possible increase in Ukraine's production estimate.

SOYBEANS

Any changes to soybean estimates in Monday's World Agricultural Supply and Demand Estimates (WASDE) report are apt to be small. Now that USDA has estimated 87.6 million acres of soybeans were planted in 2021, analysts expected soybean production to total 4.374 bb, based on a slightly lower yield of 50.6 bpa.

Similar to corn, I doubt USDA will change its yield estimate in Monday's report, but could make an attempt in August if drought persists in the northwestern Midwest. Until USDA conducts field observations in September, there is not much hard evidence for USDA to adjust yield estimates.

Dow Jones' survey expects USDA to slightly increase its estimate of U.S. old-crop ending soybean stocks to 136 mb, but a reduction is expected for new-crop ending stocks, from 155 mb to 140 mb. So far, China has bought 152 mb of new-crop soybeans from the U.S., a modest start while still shipping Brazil's record harvest home.

USDA's measure of world soybean stocks is expected to come down slightly, from 88.0 mmt in June to 87.6 mmt, for 2020-21. USDA's crop estimate for Brazil is expected to stay at 137.0 bb or 5.03 bb, while the crop estimate for Argentina is expected to be trimmed from 47.0 mmt to 46.4 mmt or 1.70 bb.

WHEAT

From USDA's June 1 Grain Stocks report, released June 30, USDA reported 844 mb of wheat in the U.S. at the end of the 2020-21 season, so there should be no surprise about that number. Monday's report will have a lot to say about the new 2021-22 season, starting with Dow Jones expecting USDA to lower its estimate of U.S. ending wheat stocks from 770 mb to 711 mb.

Monday's accompanying Crop Production report from NASS will include specific production estimates for the different classes of wheat. Keep in mind, the spring wheat estimate has a wide margin of error in July. Dow Jones's survey expects USDA to estimate 1.835 bb of all wheat production in 2021-22, down from 1.898 bb in June and close to last year's 1.826 bb.

Winter wheat production is expected at 1.337 bb, divided out as 792 mb of hard red winter wheat, 344 mb of soft red winter wheat and 201 mb of white wheat. Other spring wheat production is expected at 446 mb and durum is set for 52 mb. White wheat and spring wheat are especially afflicted by drought in 2021 and July's USDA estimates -- whatever they are -- will not be the end of those stories.

Wheat, of course, is a world crop and to that point, Dow Jones expects USDA to slightly reduce its estimate of world ending wheat stocks in 2021-22 from 296.80 mmt to 295.80 mmt or 10.87 bb. Given the latest reports from abroad, expect to eventually see higher production estimates for Europe, Ukraine and Russia.

Overall, USDA's July WASDE report is not expected to have a large impact on grain or soybean prices Monday. Traders will likely remain focused on weather, but a surprise is always possible.

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Join DTN's webinar at noon CDT Monday, July 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 Monday's WASDE report webinar: https://ag.dtn.com/…

U.S. PRODUCTION (Million Bushels) 2021-22
Jul Avg High Low Jun 2020-21
Corn 15,007 15,168 14,182 14,990 14,182
Soybeans 4,374 4,405 4,135 4,405 4,135
U.S. AVERAGE YIELD (Bushels Per Acre) 2021-22 (WASDE)
Jul Avg High Low Jun 2020-21
Corn 178.0 179.5 172.0 179.5 172.0
Soybeans 50.6 50.8 50.0 50.8 50.2
U.S. ENDING STOCKS (Million Bushels) 2020-21
Jul Avg High Low Jun
Corn 1,091 1,211 957 1,107
Soybeans 136 149 115 135
Wheat 845 852 843 852
U.S. ENDING STOCKS (Million Bushels) 2021-22
Jul Average High Low Jun
Corn 1,309 1,540 1,057 1,357
Soybeans 140 165 102 155
Wheat 711 809 573 770
WORLD ENDING STOCKS (Million metric tons) 2020-21
Jul Avg High Low Jun
Corn 278.4 284.0 274.0 280.6
Soybeans 87.6 88.7 86.7 88.0
Wheat 293.5 295.0 292.8 293.5
WORLD ENDING STOCKS (million metric tons) 2021-22
Jul Avg. High Low Jun
Corn 287.0 291.7 278.6 289.4
Soybeans 92.3 93.5 90.5 92.6
Wheat 295.8 300.0 292.0 296.8
WORLD PRODUCTION (million metric tons) 2020-21
Jul Avg High Low Jun
CORN
Argentina 47.5 48.0 47.0 47.0
Brazil 91.5 97.0 87.9 98.5
SOYBEANS
Argentina 46.4 47.0 45.0 47.0
Brazil 137.0 138.0 135.7 137.0
U.S. PRODUCTION (million bushels) 2021-22
Jul Avg. High Low Jun 2020-21
All Wheat 1,835 1,932 1,724 1,898 1,826
Winter 1,337 1,372 1,308 1,309 1,171
HRW 792 826 762 771 659
SRW 344 357 325 335 266
White 201 246 180 202 246
Other Spring 446 537 358 N/A 586
Durum 52 65 40 N/A 69

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

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Todd Hultman