- August USDA report supportive to grain, bearish of soybeans; USDA finds 1.0 million extra acres of beans and loses 900,0000 acres of corn.
- The USDA August crop report was slightly bullish of corn/wheat, but bearish of soybeans. NASS adjusted US 2024 corn acres downward by 800,000 acres to 90.7 million acres seeded with harvested acres falling 700,000 acres to 82.7 million acres. US wheat seeding and harvested acres declined 900,000 acres to 46.3 million and 37.9 million acres, respectively. FSA data was positive for the grains, but the finding of 1.0 million acres of additional soybean acres was bearish.
- The USDA forecast the 2024 US corn yield at a record 183.1 XBA, up 2.1 bushels/acre from trendline which combined with the fall in acres, raised the 2024 US corn crop size by 47 million bu to 15,147 million bu vs July. Note that old crop carry-in corn stocks dropped by 10 million bu due to a 25 million increase in exports and 15 million drop in food use. US 2023/24 corn ethanol use held steady at 5,450 million bu. US 2023/24 US corn exports were raised to 2,250 million bu on pace analysis.
- The average US corn farmgate price dropped $0.10/Bu to $4.20 in 2024/25. The new crop corn stocks/use ratio at 13.8% argues that spot corn futures are undervalued with spot futures to be closer to $4.00. 2024/25 world corn stocks fell 500,000 mt to 310.2 million mt due to a decline in Argentina/Ukraine crops.
- The USDA trimmed the Argentine corn crop to 50.0 million mt with Ukraine cut by 500,000 mt to 27.2 million mt. We expect further falls in Argentine and Ukraine crops as harvest data becomes available. The Brazilian 2024 corn harvest held steady at 124 million mt, while China’s corn imports were left alone at 23.0 million mt.
- The bearish surprise of the August USDA report was the finding of an additional 1.0 million acres of planted soybeans which along with a record yield, pushed US 2024/25 US soybean production upwards by 154 million bu to 4,589 million bu. Such a massive gain was not expected as it raised 2024/25 US soybean end stocks to a burdensome 560 million bu. USDA is forecasting a farmgate price of $10.80/bu which appears high with November soybean futures priced at $9.80.
- 2024/25 US soybean exports raised 25 million to 1,850 million bu. China needs to speed up its purchase pace if the US is to reach this total. The risks are real that 2024/25 US soybean end stocks could rise above 600 million bu and apply pressure to where November drops to a harvest low of $9.25-9.50. Rallies in November soybean futures will struggle above $10.25-10.50.
- The USDA raised 2023/24 China soybean imports to a record large 111.5 million mt and held 2024/25 at 109 million mt. Chinese demand will not be large enough to absorb all the supply and the message is that price falls to levels that curtails Brazilian seeding that starts on September 1. Soybean futures could fall below $9.00 next spring if Brazil produces a record large 169 million mt crop.
- Wheat data leans neutral to supportive in the long run. NASS hiked it US all-wheat yield to 52.2 bushels/acre vs. 51.8 in July, as higher projected winter yields more than offset lower durum/spring wheat yields. Winter wheat yield is raised 1.2 bushels/acre to 53.2; spring wheat yield was trimmed .5 bushels/acre to 52.6.
- Harvested wheat area was lowered 900,000 acres, and total US wheat production was cut a modest 26 million bu. This triggered a like amount drop in end stocks, which are now pegged at 828 million bu, vs. 856 million bu in July. Consumption was left untouched and based on worse than expected yields/quality in Europe, we view USDA’s 825 million bu US wheat export figure as 25-50 million bu too low.
- USDA’s adjustments to global wheat supply and demand did reflect enlarged production in Kazakhstan and Pakistan, where combined production will be up 7 million mt year on year. Ukrainian wheat output was lifted 2.1 million mt to 21.6 as final harvest data became available. Yet, EU production was lowered by 2 million mt. World wheat trade in 2024/25 was increased 2 million mt. World wheat feed consumption was increased 4 million mt. Exporter wheat stocks were lowered 1 million mt, with exporter stocks/used pegged at 13.2%, vs. 13.6% in July and vs. 14.2% in 2023/24.
- Corn’s value is being reflected amid soaring crude prices, profitable ethanol margins and as the US looks to dominate trade between Sep and winter 2025, and USDA is still 6-8 million mt too high with its combined Ukrainian/Argentine/Brazilian corn production estimates. It is the soy complex where bearish sentiment remains amid the need for reduced US area in 2025, assuming normal S American weather in Dec-Jan. However, with the release of USDA’s Aug report, most of the bearish input has been digested. The grains should be forming longer term annual lows.