USDA released the July crop production and supply and demand reports Wednesday, and yes, there was some market reaction after the bearish report. The average trade estimate for 2016/17 corn ending stocks was 2.303 billion bushels while the actual number was 2.37 billion. For the 2017/18 marketing year, the average trade guess was 2.113 billion bushels and the actual number was 2.325 billion.
Soybean numbers were called neutral to slightly bullish. Soybean ending stocks were expected to decline form USDA’s previous estimate. Guesses for 2016/17 averaged out at 428 million bushels while the actual number was 410 million. For 2017/18, the average trade guess waas 490 million bushels. USDA’s number Wednesday was 460 million bushels.
Wheat ending stocks were expected to decline from 924 to 867 million bushels but USDA actually increased the number to 938 million.
Don Roose, President of U.S. Commodities, thought the world ending stocks were the key numbers in the supply and demand report. “The world ending stocks on corn went up 6.5 million metric tons, course grains in general went up almost 7 million metric tons. The world ending stocks on soybeans went up 1.3 million metric tons.”
USDA put the spring wheat crop at 423 million bushels. Roose said, “All focus was on spring wheat as that is where the bull market started. That 423 million number was on the top end of the range and and it feels like the market has maybe put it’s rationing top in for the spring wheat.”
USDA increased the carryout for the nation’s winter wheat crop by 14 million bushels when the trade expected a decrease of about 55 million bushels.
Indiana’s winter wheat crop is projected to have an average yield of 76 bushels per acre, down from 81 a year ago with total acreage pegged at 260,000 acres. Total production down 7.8 percent from last year with a total production number of 19.76 million bushels compared to last year’s 22.68 million.
Winter wheat production nationally is forecast at 1.28 billion bushels, down 23 percent from 2016. Based on July 1 conditions, the United States yield is forecast at 49.7 bushels per acre, the second highest average yield behind only last year’s 55.3 bushels per acres yield. The lower total production comes from a 15 percent acreage reduction from last year. Total winter wheat acres this year totaled 25.8 million.
Durum wheat production is forecast at 57.5 million bushels, down 45 percent from 2016. The United States yield is forecast at 30.9 bushels per acre, down 13.1 bushels from last year. Durum acreage was down 21 percent from a year ago at 1.86 million acres.
Other spring wheat production is forecast at 423 million bushels, down 21 percent from last year. Total spring wheat acreage in down 7 percent from a year ago totaling 10.5 million acres. The United States yield is forecast at 40.3 bushels per acre, down 6.9 bushels from last year. Of the total production, 385 million bushels are Hard Red Spring wheat, down 22 percent from last year.
Wheat futures Wednesday were down 10 to 16 cents across the three exchanges. Corn futures were down 15-16 cents and soybeans ended 8-9 cents lower.
Don Roose concluded, “We went into this report very overbought. We need a bullish report or bullish weather to hold the market together and the report was basically negative for corn and wheat and neutral, maybe a little positive for soybeans. Soybean yields will be determined in August. USDA left corn and soybean yields unchanged as we’re going to get a surveyed yield in August that’s going to be the real test.”