The July WASDE report was bearish for grains. The biggest disappointment for the bulls was USDA’s ending stocks figure for soybeans.
USDA worked in the 4 million acre drop for soybeans from the June 30 Acreage report but left yield unchanged and lowered demand which resulted in a 300 million bushel ending stocks number. That was 100 million bushels above expectations and a blow to the market and prices.
Brian Splitt, AgMarket.Net says, “Big picture pretty bearish compared to pre report estimates. They went ahead and they cut the export demand by 125 million bushels. Makes sense based on the pace that we’re running right now you know, we are running about 10 million tons on our new crop export book below where we were last year so it makes sense for them to come in here and adjust that lower. They did reduce crush a little bit by 10 million bushels.”
USDA did drop corn yield 4 bushels per acre only 1 bushel above expectations which was considered a victory because the agency rarely makes yield revisions this early in the season and yields could be cut moving forward due to drought. So, ending stocks ended only 5 million bushels above last month even after working in the extra 2 million acres from the report. However, that still out carryover at 2.262 billion bushels which is bearish.
Splitt says, “So those acres transfer over into balance sheet yield comes down a little bit. They actually increased demand a little bit. They reduced export and they reduced corn for ethanol but they raise the feed and residual and that’s kind of a head scratcher must be more on the residual side of things, which I tend to think means they overestimated last year’s crop.”
The increase in wheat production by 74 million bushels was mostly due to higher winter wheat. So, ending stocks were raised 30 million but are still the lowest in nearly 16 years. And Splitt says spring wheat production at 482 million bushels could drop due dryness in the Northern Plains further tightening that balance sheet.
