Update-USDA Surprises Trade in Supply-Demand
Jul 11, 2014
WASDE Video Commentary
Full Analysis of the July 11th USDA Report
Old Crop Corn: The real changes made to the corn balance sheet came from old crop. USDA raised its estimate of ending stocks (August 30, 2014) up from 1.146 billion last month to now 1.246. This was just over the trade’s estimate of 1.232. We knew they would be raising old crop due to the bigger than expected stocks count from the June Grain Stocks report. USDA lowered feed/residual by 125 million and raising corn for ethanol by 25 million.
New Crop Corn: The bearish sentiment from the new crop numbers is mostly due to the increase in old crop. This was carried over into the new crop numbers in the beginning stocks category. New crop production was actually lowered by 75 million due to the June 30 Planted Acreage report. You may remember that report actually lowered their harvested estimate. No change to USDA’s 165.3 bpa yield was made. The trade, and certainly Allendale, feels we are actually running higher than that. The only demand change was a 50 million bushel drop in feed/residual. New crop stocks were raised from 1.726 billion last month to now 1.801. This was just over the 1.774 average guess. The trade is pricing corn under the assumption of a yield increase on the August report.
World Numbers: Old crop ending stocks were raised from last month’s 169.1 million tonnes to now 173.4. New crop was increased from 182.7 mt to now 188.1. Aside from changes from the US, USDA raised Canada’s crop by a small amount and the Chinese crop by 2 mt to now 222.
Old Crop Soybeans: Based on the finding of more stocks in the June Grain Stocks report USDA raised its August 30 ending stock estimate today. The move, from 125 million last month to now 140, was bigger than the 128 guess. Note that USDA did raise crush and exports by 45 million today. To make their numbers work they brought seed/feed/residual down by 65 million bushels and imports by 5. Don’t forget that USDA will make these numbers work even better with a revision of the fall 2013 harvest. That will be shown on the upcoming September 30 Grain Stocks report.
New Crop Soybeans: The big jump in new crop stocks, from 325 million last month to now 415 was largely expected (418 average guess). USDA added that big acreage change from the June 30 Planted Acreage report. No change was made for yield. The trade is not as sure on soybean yields as they are for corn. The big jump in supply from higher production and higher beginning stocks was partially offset by a 90 million bushel increase for crush and exports.
World Numbers: Old crop world stocks were increased slightly, from 67.17 million tonnes to 67.24. New crop was increased from 82.9 mt to now 95.3. The only other changes, aside from higher US numbers, was 1 million increase for Chinese imports that was offset by 1 million increase for domestic use.
Old Crop Wheat: The old crop marketing year ended on May 31. This report simply adjusted the stocks to the June physical count in the Grain Stocks report. Stocks declined from 593 million bushels to now 590.
New Crop Wheat: USDA surprised the trade by increasing new crop stocks from last month’s 574 million to now 660. The trade was looking at 591. Acreage was increased due to the June survey. Production was increased by 50 million bushels. The winter wheat harvest was adjusted down from 1.381 billion last month to now 1.367. Increases were made for spring wheat and durum. Along with higher production USDA lowered usage by 40 million from feed/residual and exports.
World Numbers: New crop ending stocks were raised from 188.6 million tonnes to now 189.5. There were active changes in other areas with increases for the crops in Australia, Brazil, and Ukraine and decreases for Canada and Kazakhstan.
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