- Today’s July WASDE report was expectedly bearish on grains and supportive to soybeans. Soybeans should, therefore, gain on the grains as the market adds additional weather premium into the soybean complex as end stock forecasts decline. US spring wheat production will likely continue to declines abandonment rates grow (rapidly) into the August and September reports. Today’s HRS and durum wheat estimates are purely the start point in the production decline process; there is likely to be a further 65-85 million bu drop in output before the final counts are done.
- Reports aside, we are now going to turn back to weather focus in the central US regions with the coming two to three weeks being key to corn and soybean yield. Volatility will doubtless ebb and flow with each and every weather forecast.
- NASS estimated 2017 US wheat production at 1,760 million bu (down 64 million or 3.5% from the June forecast) based on a dramatic cut in US spring wheat production. NASS estimated US HRS wheat production at 385 million bu. US HRS wheat end stocks were forecast at just 122 million bu, down 113 million or 48% from last year. US HRW wheat end stocks fell 145 million bu to 448 million bu while US SRW wheat end stocks rose to 236 million bu from this year’s 215 million. WASDE cut 2017/18 US wheat exports by 25 million bu to 975 million bu and also cut feed/residual use by 20 million bu to 150 million. The cuts in export/feed use of 45 million helped balance the decline in new crop supply of 64 million bu. When the additional old crop carryover of 23 million bu is included, it raised 2017/18 US wheat end stocks to 938 million bu, which makes it difficult to sustain a rally much above $5.70-5.90 basis September Chicago wheat futures. The wheat data was bearish. We would note that 2017/18 world wheat end stocks grew to a record large 261.2 million mt up slightly from June. Russian 2017 wheat production was raised to a near record 72 million mt, whilst Australian production was trimmed by 1.5 million mt to 23.5 million. The EU wheat crop was only moderately cut by 750,000 mt to 150.0 million mt. The world still has plenty of wheat, but world major exporter supplies are in decline with a reduction expected in Canada in the August WASDE report.
- US 2017/18 US corn end stocks rose to 2,325 million bu, up 215 million from the June forecast. The increase is based on the enlarged old crop supplies and the larger new crop seeding that was indicated in the June report. WASDE used a trend corn yield of 170.7 bushels/acre. If the yield was cut 5 bushels/acre, it would leave US 2017/18 corn end stocks of 1,900 million bu. Such stocks are adequate and it would take a yield of less than 160 bushels/acre to become bullish corn. We still see 2017/18 of US corn exports being 150 million bu lower at 1,725 million bu. US 2017/18 world corn stocks rose to 200.81 million mt, up 6.5 million from June, but still down 27 million from the current crop year. The 2017 Ukraine corn crop was left at 28.5 million mt, which many see as 3-4 million too large.
- US 2016/17 soybean end stocks were lowered by 40 million bu based on a 50 million bu increase in exports (record large 2,100 million bu), and a 10 million bu reduction in the residual to 14 million bu. The smaller old crop stocks reduced 2017/18 US soybean end stocks to 460 million bu. It should be noted that WASDE raised China’s 2016/17 US soybean imports to 91 million mt and raised 2017/18 to 94 million mt. The rise in Chinese imports was long overdue.