USDA Reports Review

Let's look at some of the changes in both U.S. and world numbers in USDA's Aug. 11 Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports, starting with corn.

CORN:

The USDA August Crop Production report utilized a survey from 15,000 producers to estimate yield and production. The survey results, as of Aug. 1, pegged U.S. corn yield at a slightly lower-than-expected 175.1 bushels per acre (bpa). That is down 2.4 bpa from July and about 0.3 bpa below where Dow Jones traders had estimated. Corn production came in 209 million bushels (mb) below the July estimate, at 15.111 billion bushels (bb). Harvested acres remained unchanged at 86.3 million. To begin, USDA had lowered 2022-23 exports by 50 mb and raised imports by 5 mb, leading to a 55 mb higher carry-in. The exports for 2023-24 were also cut by 50 mb, leading to an ending stocks number of 2.202 bb -- down 60 mb from July, and 23 mb higher than Dow Jones survey respondents had expected. Feed and residual use was dropped by 25 mb due to the lower crop size. Corn yields in Indiana, Iowa, Nebraska, Ohio, and South Dakota were higher than last year, while yields in Illinois, Minnesota and Missouri fell.

On the world front, WASDE raised the Brazilian corn crop by 2 million metric tons (mmt) to 135 mmt (5.31 bb), raised Ukraine by 2 mmt to 27.5 mmt (1.08 bb), while lowering both EU production by 3.7 mmt to 59.7 mmt (2.35 bb) and Russian corn production by 1.7 mmt to 14.6 mmt (575 bb). On feed usage, Russia was cut by over 1 mmt, Egypt by 1 mmt and the EU by just over 2 mmt. The net effect of the world changes was to lower world ending corn stocks by a greater-than-expected 3.1 mmt to 311 mmt (12.2 bb) compared to July and to the Dow Jones estimate.

While the report was mostly as expected, or even slightly more bullish than traders had expected, corn futures fell into the close, likely on the idea that the September WASDE could reflect improving yields due to August rains. December corn finished 9 cents lower at $4.87 1/4.

SOYBEANS:

As in corn, the soybean data reflected a neutral to even slightly bullish result. Soybean production was pegged at a lower-than-expected 4.21 bb with a yield of 50.9 bpa that was down 1.1 bpa compared to July, and even 0.3 bpa under the Dow Jones trade estimate. Soybeans came into the report with a higher carry-in due to a 5 mb higher import number. With the same harvested acres of 82.7 million acres, new-crop ending stocks were lowered by a more-than-expected 55 mb -- from 300 mb in July to 245 mb Friday. New-crop changes were an increase in imports of 10 mb and a drop in exports of 25 mb to 1.825 bb to account for the smaller crop. The average farm price for beans was ratcheted higher by 30 cents to $12.70 per bushel. The average price for soymeal rose by $5 to $380 metric ton (mt) and for bean oil, up 2 cents to 62 cents.

Globally, there were few significant changes, with world ending stocks coming in at 119.4 mmt (4.39 bb) -- down 1.6 mmt from the July report and down 1.6 mmt from the trade expectations of 121 mmt (4.44 bb). There were no changes made to China demand or to South American production. As in corn, soybean futures rallied sharply upon the report release, and then crumbled, with November closing with a loss of 10 3/4 cents, settling at $13.07 1/2.

WHEAT:

Wheat was certainly not supposed to be the headliner for the August WASDE report, but it is the market that had the most changes, most of them on the world side. U.S. all wheat production came in 5 mb lower than in July, at 1.734 billion bushels. Yield dropped by 0.3 bpa to 45.8 bpa. Domestic use was 3 mb lower, and exports fell by 25 mb to 700 mb to account for the slow pace. Spring wheat production fell by 29 mb, while a combination of hard red and soft red winter wheat gained 26 mb from July. U.S. ending stocks rose by a greater-than-expected 23 mb to 615 mb. The report was deemed slightly bearish for U.S. wheat. The average farm price for wheat was left unchanged at $7.50 per bushel.

Globally, we had several changes. Following drought in many areas, Canada was lowered 2 mmt to 33 mmt (1.21 bb), the EU fell 3 mmt to 135 mmt (4.96 bb), while China wheat production dropped 3 mmt to 137 mmt (5.03 bb). Ukraine wheat production was increased 3.5 mmt to 21 mmt (771 mb), and production in Kazakhstan rose 1 mmt to 15 mmt (551 mb). Canada's exports were slashed 2 mmt to 24.5 mmt (900 mb), while Russia's wheat exports were raised 500,000 mt to 48 mmt (1.76 bb). Ukraine feed usage rose by 1 mmt while EU feed usage fell by 2 mmt. The net effect of all the changes was world wheat ending stocks falling from 266.5 mmt in July to 265.6 mmt (9.76 bb) in August.

FINAL THOUGHTS

While the trade had expected slightly bullish cuts to corn and soy yield, production and ending stocks, the cuts were greater than expected. However, the market reaction was initially a head fake, as corn and beans rose, only to plunge midsession before closing lower. Wheat was down for much of the day, finishing sharply lower. With the U.S. soybean ending stocks falling to a near-pipeline 245 mb, the weather in South America will be of utmost importance in coming months. Friday's survey reflected conditions as of Aug. 1, and it is very possible additional yield benefit could be realized after the plentiful rains during the first half of August.

Daily closes reflected December corn at $4.87 1/4 and down 8 cents, November beans at $13.07 1/2 and down 11 cents, and Kansas City December wheat down 11 3/4 at $7.55 3/4.

Note: The Farm Service Agency (FSA) came out with prevented planting data on Friday, with the following prevented planting numbers: corn 1.42 million acres; soybeans 459,000 acres; wheat 641,000 acres. The three-crop total was 2.52 million acres versus 3.56 million a year ago.

Dana Mantini can be reached at dana.mantini@dtn.com

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