USDA report bearish information for corn and soybeans

Today USDA released the latest World Agricultural Supply and Demand Estimates (WASDE) report. The report pegged 2023/2024 U.S. corn and soybean production and yield numbers higher than the market projected, making for a bearish report.

2022/2023 U.S. ending stocks 

The WASDE report pegged the U.S. 2022/2023 corn ending stocks at 1.402 billion bushels, below the June estimate of 1.452 billion and the trade’s expectation of 1.406 billion bushels.

For soybeans, the U.S. ending stocks were pegged at 255 million bushels, above the June estimate of 230 million and the trade’s expectation of 235 million bushels.

USDA pegged the U.S. wheat ending stocks at 580 million bushels, below June’s estimate of 598 million bushels. The trade’s expectation was 583 million bushels.

2023/2024 U.S. ending stocks

The WASDE report pegged the U.S. 2023/2024 corn ending stocks at 2.262 billion bushels vs. the trade’s estimate of 2.166 billion and last month’s estimate of 2.257 billion bushels.

For soybeans, the U.S. ending stocks were pegged at 300 million bushels vs. the trade’s expectation of 206 million bushels and last month’s estimate of 350 million bushels.

USDA pegged the U.S. wheat ending stocks at 592 million bushels, above the trade’s expectation of 565 million bushels and last month’s estimate of 562 million bushels.

2023/2024 U.S. Crop Production

USDA is estimating corn yield to be 177.5 bushels per acre to produce 15.320 billion bushels. Last month’s estimates were for 181.5 bushels per acre and 15.265 billion bushels. The trade was expecting a corn yield of 175.8 and a total production number of 15.149 billion bushels. 

Soybean yield is pegged at 52 bushels per acre to produce 4.300 billion bushels. Last month’s estimates were for 52 bushels per acre and 4.510 billion bushels. The trade was expecting a yield of 51.4 and a total production number of 4.276 billion bushels. 

Wheat yield is pegged at 46.1 bushels per acre. Total production is estimated to be 1.739 billion bushels. Last month USDA estimated yield at 44.9 bushels per acre and production at 1.665 billion bushels. 

2022/2023 World ending stocks

USDA pegged world corn ending stocks at 296.3 million metric tons (mmt) vs. the trade’s expectation of 297.8 mmt. Last month, USDA’s estimate was 297.6 mmt.

For soybeans, world ending stocks are estimated at 102.9 mmt vs. the trade’s expectation and last month’s estimate of 101.3 mmt.

For wheat, USDA pegged world ending stocks at 269.3 mmt. vs. the trade’s expectation of 266.2 mmt. USDA’s June estimate was 266.7 mmt.

2023/2024 World ending stocks

USDA pegged world corn ending stocks for 2023/2024 at 314.1 mmt vs. the trade’s expectation of 312.4 mmt. Last month USDA pegged ending stocks at 314 mmt.

For soybeans, world ending stocks are estimated at 120.9 mmt vs. the trade’s expectation of 120.4 mmt. Last month’s estimate was for 123.3 mmt.

For wheat, USDA pegged world ending stocks at 266.5 mmt. This is below the trade’s expectation of 270.8 mmt and last month’s estimate of 270.7.

2022/2023 Argentina and Brazil crop production

For corn, Argentina’s production is pegged at 34 mmt, below the trade’s expectation of 34.3 mmt. Last month’s estimate was 35 mmt.

Brazil’s corn production is estimated at 133 mmt vs. the trade’s expectation of 132.8 mmt and last month’s estimate of 132 mmt.

For soybeans, Argentina is estimated to produce 25 mmt vs. the trade’s expectation of 23.6 mmt and June’s estimate of 25 mmt.

Brazil’s soybean production is pegged at 156 mmt vs. the trade’s expectation of 156.2 mmt and last month’s estimate of 156 mmt.

More from USDA

USDA says, “Corn production for 2023/2024 is forecast up 55 million bushels as greater planted and harvested area from the June 30 Acreage report is partially offset by a 4.0-bushel reduction in yield to 177.5 bushels per acre.

“According to data from the National Centers for Environmental Information, harvested-area-weighted June precipitation data for the major Corn Belt states represented an extreme downward deviation from average. However, timely rainfall and cooler than normal temperatures for some of the driest parts of the Corn Belt during early July is expected to moderate the impact of June weather. For much of the crop, the critical pollination period will be in the coming weeks. With supply rising fractionally and use unchanged, ending stocks are up 5 million bushels.”

Concerning soybeans, USDA says, “With lower production partly offset by higher beginning stocks, 2023/2024 soybean supplies are reduced 185 million bushels. Soybean crush is reduced 10 million bushels reflecting a lower soybean meal domestic disappearance forecast. Soybean exports are reduced 125 million bushels to 1.85 billion on lower U.S. supplies and lower global imports. With lower supplies only partly offset by reduced use, ending stocks for 2023/2024 are projected at 300 million bushels, down 50 million from last month.”

For wheat, USDA says “Changes this month to the 2023/2024 U.S. wheat outlook increase supplies and domestic use, leave exports unchanged, and increase ending stocks. Supplies are raised on larger production, which is up 74 million bushels to 1.739 billion, on higher harvested area and yields … Gains for all wheat production are partly offset by smaller beginning stocks, which are lowered 18 million bushels to 580 million as indicated in the Grain Stocks report, issued June 30. The 2023/2024 ending stocks are forecast at 592 million bushels, 30 million higher than last month.”

Trade Reaction

Naomi Blohm, senior market advisor with Total Farm Marketing: “Today’s USDA report zapped any friendly hope the grain markets were looking for,” says Blohm. “With the lack of fresh bullish news for soybeans, prices had no where to turn but lower, as range trading will likely follow in the weeks ahead until more is known regarding August weather.

“For corn, the USDA did acknowledge that a record corn yield is likely out of the question but was very cautious in how much they lowered yield, allowing themselves room to lower yield again in the August report if warranted. In the mean time, traders will start to look to satellite imagery in the coming weeks to get a better idea of yield. Last year, the satellites pointed out that yield was lower than the USDA numbers, and that put a late July low in the market.

“With a big crop coming, the USDA made no changes to demand for corn, as corn prices appear to be on the “cheaper” side, and will keep demand strong.”

Jeremy McCann, account manager with Farmer’s Keeper: “Yield estimates did not come down as much as trader estimates had hoped for corn and remained unchanged for soybeans,” McCann says. “As of right now this has led to all of this week’s positive movement to be erased from the market as I had anticipated.

“With poor export numbers for both corn and beans, and a favorable weather forecast ahead, the market is trying to find a reason for $5 corn and $13 beans and it’s unable to do so. Looking ahead, barring a black swan event, $4.50 corn looks much more probable than $5.50, and beans will likely continue to slide down into the $12 range.”

Cory Bratland, chief grain strategist with Kluis Commodity Advisors: “Soybean yield being unchanged is not a big surprise,” says Bratland. “We definitely have to get closer to the month of August. August weather is so key to the crop size for soybeans in the U.S.”

However, he adds USDA has room to lower both corn and soybean yields in future report and 52 bushels per acre would be one of the highest yields in history.

Concerning corn, he says, “There is also plenty of room for USDA to lower demand as well in the upcoming year. I look for corn carry out to still stay north of 2.1 billion bushels.”