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July 10, 2020 | FBN Insights | Kevin McNew

USDA July WASDE & Crop Production Reports Hit Today

New-crop balance sheet is poised to show a hefty carryout

USDA Reports Hit at 11am CT; Quick Review of Market Expectations  

  • USDA’s July WASDE and Crop Production reports will be issued today.
  • June 1 stocks point to larger wheat and corn old-crop stocks.
  • The June Acreage report points to lower corn production.
  • The market looks for corn 2020/21 stocks to be lowered to 2,693 million bushels versus 3,323 in June and for an increase in old-crop stocks.
  • New-crop soybean stocks are seen at 416 million bushels and up marginally from the June forecast.
  • Market expectations for corn production hit the 15 billion bushel mark with soybeans seen at 4,150 million.
  • All wheat production is seen lower at 1,848 million bushels, largely due to a cut in spring wheat area versus the March plantings report.

FBN’s Take On What It Means: FBN cautions producers that while corn acreage was cut 5 million versus March plantings the new-crop balance sheet still is poised to show a hefty carryout.  We still are not confident that corn futures will top the $3.80 mark.  The demand side of the corn balance sheet is suffering with the lock down cutting back on ethanol use.   

Update on Argentina’s Wheat

  • There have been reports that dryness concerns in Argentina are developing.
  • This is the winter wheat planting season for Argentina but plantings were reported at 87% complete recently and are in line with last year.
  • Moisture conditions were rated at 59% poor/dry versus 29% last year with 40% rates as favorable versus 69% last year.
  • The crop is rated at 22% excellent/good, 60% fair, and 18% poor/very poor.
  • Last year’s ratings were 40% excellent/good, 48% fair, 12% poor/very poor.
  • The Rosario grains exchange may cut its planted area forecast to 6.5 million hectares versus the current forecast at 6.6 million; the current production forecast is at 18-19 million tonnes.

FBN’s Take On What It Means: While parts of Argentina are dry, the winter wheat planting season is wrapping up.  Harvest is set to start late in the calendar year, so there is ample time for the crop to react.  While FBN acknowledges the current situation, the crop could easily turn around with moisture at the right time of the growing phase.  It still is too early to make significant assumptions about cuts to production.

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