USDA made some minor revisions to the grain balance sheet in the June WASDE, that includes lowering corn exports. The agency did not revise corn yields or production right now, but it did increase old crop ending stocks...up 35 mb 1.45 billion bushels.
It’s due to a cut in exports...and expectations of competition from Brazil in the next few months. That puts new crop carryover for corn at more than 2.22 billion bushels.
As for soybeans, again no change to production right now, but it increased old crop ending stocks by 15 mb based on lower exports. Coming in now at 230-million bushels. And a new crop carryover was raised to 350 mb.
As for wheat...598 mb still in the bin...and 562 mbs for next year’s carryover.
USDA did change the wheat production forecast, boosting yields up slightly on higher hard red winter wheat production offsetting a cut in soft red winter and white winter. The all-wheat yield now 44.9 bushels per acre, which is still below last year.
The market usually doesn’t trade this report very long before focusing on weather. Plus, USDA doesn’t make to corn and bean supplies until July, when they incorporate the Acreage and Quarterly Stocks. So, this report mainly saw adjustments in demand. But it left a bearish reminder that U.S. supplies are growing.
While market analysts think USDA may need to cut corn yield in the next WASDE, the slow demand for U.S. corn indicated in this report will offset that. USDA cut exports another 50 million bushels, which raised the ending stocks 35 mb. Plus, USDA raised Brazil corn production 2 million metric tons which will also compete against U.S. corn.
John Heinberg, Total Farm Marketing says, “We just got to realize that this Brazil crop is huge. It’s going to be undercutting the market prices at this timeframe. And we’re just going to have a hard time moving things and that’s probably the biggest bearish factor that’s out there. You know, despite the weather that’s going on. You know, despite the weather that’s going on, you know, people talk about weather and why haven’t we rallied? It’s a pure fact that we just can’t move this product and that demand is going to trump you know, anything that we see on the weather front bar get really getting severe.”
He says the new crop ending stocks on soybeans came in 15 million bushels higher than last month with a subsequent cut in exports which was a bit surprising with some recent soybean sales. Heinberg says, “But again showing that pattern that we’re just looking maybe a little heavy on the demand side, adding a little more to carry out and then that just trickles through without any changes in terms of yield acres or production for the fall.”
USDA also raised Brazilian soybean production 1 million metric tons to 156 million, which is a record and with their lower prices they are undercutting the U.S. in the export market which will be headwind on rallies in the beans short term.
