USDA Reports Review

While the corn and soybean portions of the July USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports were mildly supportive, wheat traders got a bearish shock from the USDA with much higher-than-expected production gains in both winter and especially spring wheat. Other spring wheat production jumped 73 million bushels above last year with a record yield forecast.

Let's look at some of the changes in both U.S. and world supply and demand numbers by crop in USDA's July 12 reports.

CORN

Traders were expecting both old- and new-crop corn ending stocks to rise, but they got a bit of a surprise Friday. U.S. old-crop corn demand rose in both the feed and residual bucket and the export bucket by an equal 75 million bushels (mb) each. That, plus a modest 5-mb change in corn imports, sent the old-crop ending stocks down 145 mb. The lower beginning stocks for 2024-25 and the decision to increase exports in the new-crop year by 25 mb sent 2024-25 ending stocks down to 2.097 billion bushels (bb), well below Dow Jones' pre-report survey average estimate of 2.272 bb.

Corn production also came in higher than expected at 15.1 bb and 240 mb higher than in June. While yield was left untouched at 181 bushels per acre (bpa), planted acres rose by 1.5 million to 91.5 million, and harvested acres increased by 1.3 million from June to 83.5 million acres. The lower ending stocks number surely put a higher premium on the need for this year's corn crop to yield well. The season average farm price for corn was lowered by a dime to $4.30 per bushel.

On the world side, there was no change to either Brazil or Ukraine corn production, while Argentina's corn crop was lowered by 1 million metric tons (mmt) to 52 mmt (2.04 bb), still a good 5 mmt to 6 mmt higher than Argentine exchanges and crop scouts see it. The net effect was to leave a still very wide spread between the USDA estimates for combined Brazil and Argentine corn production and other crop scouts, exchanges and reporting agencies, such as CONAB. Some other changes were small declines in EU, Russian and Canadian corn production and higher corn imports for both Canada and Mexico. World ending corn stocks for 2024-25 came in at 311.6 mmt (12.27 bb), which was 800,000 metric tons (mt) higher than the June estimate, but about in line with trade expectations.

Prior to the report, corn was trading sharply lower on expectations for a more bearish corn number, but by the close, ended up 4 cents higher to settle at $4.14 3/4, nearly 12 cents above the new contract low set before the report.

SOYBEANS

The soybean part of the July WASDE had only a few changes of significance and could be termed neutral to supportive. U.S. soybean production was pegged at 4.435 bb, while the trade had expected 4.416 bb. Production figured 15 mb below that of June, as harvested acres fell 300,000 from June at 85.3 million acres. Soybean imports were dropped 5 mb to 20 mb. New-crop 2024-25 ending stocks fell by 20 mb to 435 mb. Traders were looking for 10 mb more than that. Yield was left unchanged at 52 bpa with traders looking for a modest decline to 51.8 bpa. The average farm price for beans was dropped a dime to $11.10 per bushel.

On the world front, USDA chose again to keep Brazil soybean production high at 153 mmt (5.62 bb), unchanged from June. That is still more than 5 mmt (184 nb) higher than Brazil crop agency CONAB. USDA did lower Argentine soy production, but just by 500,000 mt to 49.5 mmt (1.82 bb), even though the Buenos Aires Exchange has the crop, already harvested, at 50.5 mmt (1.86 bb). On a significant note, despite the conspicuous absence of China in the U.S. new-crop sales column, USDA chose to raise China soy imports to a record 108 mmt (3.97 bb). Earlier Friday, China's ag minister said China would import only 94.6 mmt (3.47 bb) of soybeans in 2024-25. World ending stocks on soybeans were little changed at 127.8 mmt (4.69 bb) compared to 127.9 mmt previously.

Soybeans were down hard prior to the report on expectations for a jump in ending stocks, then rallied after the report, only to fall back again, with November finishing less than 6 cents above the new contract low, at $10.65 1/4.

WHEAT

With traders already expecting a slightly bearish USDA wheat report and all three wheat markets trading down sharply before the release, USDA, as it often does, surprised even the most bearish traders. The increase in all-wheat production turned out to be far greater than many had expected. All-wheat production rose 133 mb above June to 2.008 bb. That also figured about 95 mb higher than the average trade estimate. The lion's share of the gain was in the hard wheat category. Hard red winter rose 37 mb above June, while other spring wheat production, at 578 mb, was 73 mb higher than last year. The spring wheat yield was reported to be 53.1 bpa, and that would be record large. Hard red spring was 532 mb of that total and reported to be the highest level in six years. Soft red wheat and white wheat accounted for a combined increase of 10 mb from June. Durum production was pegged at over 89 mb -- a 30-mb increase from last year. The result was that wheat ending stocks rose 98 mb from June. Other domestic changes were wheat imports up 15 mb, feed and residual up 10 mb, and exports for 2024-25 were increased by 25 mb to 825 mb. The season average farm price for wheat fell 80 cents to $5.70 per bushel. Wheat planted acres were less than last year, but harvested acres were 38.8 million compared to 38 million a year ago.

On the world front, there were minor changes with Canada production increased by 1 mmt to 35 mmt (1.29 bb); Argentina increased 500,000 mt to 18 mmt (661 mb); and EU production dropped 500,000 mt to 130 mmt (4.77 bb). Ukraine and Russian production were left unchanged despite the well-advertised heat and dryness there. World ending wheat stocks, at 257.2 mmt, (9.45 bb) were up 5 mmt from June.

Wheat was down hard prior to the report release and ended up extending losses in Chicago, where September matched its contract low, and in Minneapolis, where September fell to a new low.

FINAL THOUGHTS

The corn market was a little less bearish than many had expected, making attaining a record or near-record yield all the more important. The numbers on the USDA report went a long way in explaining the weakness in wheat. Funds came into the report short what could be a record position in the markets, and there was little reason for them to cover those shorts.

December corn closed up 4 cents at $4.14 3/4. November beans closed down 2 1/2 cents at $10.65 1/4, and Kansas City September wheat plunged 16 cents to close at $5.67 3/4.

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

Follow Dana Mantini on Twitter @mantini_r

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