A rise in exports could help shave the record stockpiles of corn and wheat in estimates expected in USDA’s July WASDE reports, according to analysts, with ongoing demand expected in soybeans.
But the report’s impact on markets is expected to be minimal, compared to weather.
“Overall with the market losing the amount of money it has lost since the June 30th report, I think market reaction to Tuesday’s WASDE report will be somewhat muted as most traders have already factored in the worst when it comes to carryout expectations,” said Angie Setzer, vice president of grain, Citizens Elevator in Charlotte, Mich
After the numbers are released at 11 a.m. Central time, the market’s focus will likely return to weather and outside economic factors within 30 minutes, she predicted.
Setzer said that stock numbers came in higher than expected on June 30 and will result in an increase in old-crop carryout for both corn and beans. “This, in addition to the increase in acreage, will likely result in a bump in new-crop carryout,” she explained.
Here are the average trade estimates for carryout, according to Reuters:
- Corn: 1.806 billion bushels for 2015/16 and 2.205 billion bushels for 2016/17.
- Soybeans: 352 million bushels for 2015/16 and 287 billion bushels for 2016/17.
- Wheat: 981 million bushels for 2015/16 and 1.107 billion bushels for 2016/17.
But there are other factors in play besides more than ample grain supplies and a global wheat glut. Brazil’s production losses should boost export demand for U.S. grains, shrinking new-crop carryout.
A turn towards hot and dry weather could decrease yields, making soybeans more bullish and steering corn into a bull market. “The USDA report will have an impact on market, but weather will take leadership. It is still the driver,” observed Louise Gartner, owner of Spectrum Commodities in New Richmond, Ohio.
All weather models are in agreement and suggest extremely hot conditions in Midwest for the next four weeks, according to Gartner.
Also worth watching: exports and feed usage.
“The key will be what USDA does with exports—sales are huge, but inspections have yet to improve,” said Larry Shonkwiler, of Advance Trading in Bloomington, Ill.
“There will be an increase in wheat feed,” predicted Gartner, noting that it is “cheaper than corn and it’s even grown in cattle feeding country.”