Overview of USDA’s July Reports
- USDA confirmed larger old-crop corn supplies amid weaker demand.
- USDA held old-crop corn exports at 1,775 million bushels but lowered feed and residual and ethanol. Ending stocks were boosted 145 million bushels.
- The largest surprise was soybean stocks being raised 35 million bushels.
- There could be production revisions to the upside for old-crop soybeans.
- New-crop balance sheets showed increases in corn stocks but declines for wheat and soybeans, generally falling within expectations.
- Corn and soybean markets reacted negative on the news.
FBN’s Take On What It Means: The demand side of the balance sheet for corn remains fragile heading into the new crop year. The outlook for soybeans is more positive. Corn futures are seen remaining well under the $4 level and probably around $3.50 as harvest nears. Chicago wheat futures had another positive day on the smaller production totals for the EU, US, and Russia.
Another Agency Cuts Russia’s Wheat Crop Outlook
- IKAR again cuts its forecast for Russia’s wheat production.
- The agency now sees the crop at 76.5 million tonnes.
- That is down from its previous forecast at 78 million and marks the second downgrade in a few weeks.
- Weaker-than-expected crop prospects in the Southern, Central, and Volga regions were cited as to the reasoning.
- USDA also cut its production forecast in the recent WASDE to 76.5 million tonnes, down from 77 million.
- About two-thirds of Russia’s wheat production is winter wheat with the remaining spring wheat.
- The latest price data show increases in Russian wheat prices despite the harvest progress in the Northern Hemisphere.
FBN’s Take On What It Means: Another cut to Russia’s production outlook is a positive for other exporters. For the US specifically, a smaller Russian crop would benefit HRW exports. As harvest progresses north for the exporter, we will learn more about the potential size of the winter wheat crop. Weather still is key for Russia for both winter wheat harvest progress and spring wheat growing conditions.
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