The July WASDE report was slightly friendly for corn with a steady yield forecast and a projection for record exports in 2024/25. The major grains ended Friday’s session mostly lower following the new numbers, with the corn market already looking ahead at bigger yields in the future.
In the report, USDA lowered old crop ending stocks for corn to 1.3 billion bushels — a 25 million bushel reduction.
“They increased exports on old crop by 100 million bushels to a record 2.75 billion bushels,” says Brian Splitt with AgMarket.Net. “The problem is, they reduced feed residual by 75 million. So, again, it was only a 25 million bushels reduction of stocks.”
USDA left new crop yield unchanged at 181 bu. but lowered corn production by 115 million bushels due to a 600,000-acre cut in harvested acres. However, new crop ending stocks were only lowered to 1.66 billion bushels, as Splitt says USDA also cut feed demand 50 million bu. and left new crop exports unchanged.
“The new crop ending stocks number was reduced by 90 million bushels, but we thought it would actually be a little bit more than that. We weren’t anticipating a reduction in feed residual already for new crop,” Splitt says.
Splitt explains this new demand trend — and the market already expecting higher corn yields due to ideal weather — could quickly raise new crop carryout closer to 2 billion bushels in future reports — at least to start.
“We’re going to see increases in demand moving forward on the balance sheet, and that’s going to walk the carryout back from that two-billion-bushel area. It will probably be something closer to where we are right now on the balance sheet — maybe a 1.75 type of a deal. I just don’t think that means we need to be at or below $4 for very long,” Splitt says.
The report was neutral for soybeans and wheat. USDA left soybean yield unchanged at 52.5 bu., but with lower harvested acres, production was lowered by 5 million bushels. Yet, new crop ending stocks were increased by 15 million bushels go 310 million.
“They reduced the soybean export estimate by 70 million bushels, but they increased crush by 50 million bushels. So, we had a net reduction in demand of 20 million bushels overall,” Splitt says.
U.S. wheat production was increased by 8 million bushels, with a 1 bushel increase in yield, but lower harvested acres by 600,000.
“One of the things we did see was the spring wheat assessment was a little bit bigger than what we were looking at previously. That did offset reductions in winter wheat production, which predominantly was in the HRW [hard red winter] side of the ledger,” Splitt says.
In the end, USDA raised exports by 25 million bushels and lowered ending stocks by 8 million bushels to 890 million bu.
