USDA will release the July WASDE report on Wednesday. Debate is raging about whether or not the agency will cut yields this early in the season. The recent drought monitor shows 67% of corn and 60% of soybeans are in a D1 to D4 drought so a yield reduction seems justified. However, it’s a wild card because historically USDA does not revise yield in July, with a few noted exceptions.
For new crop corn ending stocks, one major survey is estimating 2.17 billion bushels and a second survey estimates 2.26 billion bushels, which is almost unchanged from June. The lower estimate offset the
2 million additional acres by lowering yield to 175 bu. per acre. However, the last time USDA cut yield in July was in the drought year of 2012. At that time, corn was only rated 40% good to excellent verses the most recent 55% rating. Either way, the ending stocks for corn look bearish.
Joe Vaclavik, Standard Grain, says: “USDA does not have a tendency, or has not had a tendency in recent years, to make July yield adjustments. That doesn’t mean they couldn’t do it, though. Personally, some sort of downward revision would be warranted. Given the drought monitor, given the drought conditions and given the crop ratings, it’s really tough to swallow the idea of a trendline yield in corn at this point.”
Soybean ending stocks estimates are around 200 million bushels, a cut of 4 million acres. Yield estimates are slightly lower at 51.2 bu. per acre with a 4.25-billion-bushel production estimate. Some analysts argue USDA might not adjust yield yet, but either way the market is looking at a nearly 150-million-bushel drop in carryover from June.
“If you lose a bushel or two off these beans, this balance sheet is going to get to next to nothing without finding a way to essentially peel off demand,” says Jim McCormick, AgMarket.Net. “This bean market has kind of calmed down a little bit, but as we ramp up in the latter part of July and August, any hint the weather is not cooperating and the heat/dryness continues, this bean market could explode because there just is zero room for error.”
The production estimate on all wheat is slightly higher at 1.68 billion bushels, with hard red winter at 529 million and soft red at 407 million. This will be the first estimate on spring wheat, which is at 477 million bushels, above last year by 31 million. New crop ending stocks are pegged at 569 million bushels up 7 million from June.
