Trade Expectations for USDA’s Thursday Reports
USDA’s monthly reports hit the markets Thursday with the US corn and bean balance sheets reflecting survey-based yields. Reuters released average trade estimates for several items.
First, the trade on average sees USDA trimming its US other spring wheat production forecast from 345 million buthsle to 325 million.
A cut in Canada’s and Russia’s production is likely with average expectations for global wheat stocks down 3.5 million tonnes versus USDA July.
Brazil’s corn crop is seen at 88.7 million tonnes, down from USDA’s July forecast at 93 million tonnes.
The average trade expectation for the US corn yield is at 177.6 bushels per acre, down from USDA’s July projection at 179.5 bushels. That would translate to production around 15 billion bushels.
The average estimate for the US bean yield is at 50.4 bushels per acre, down from USDA’s July projection at 50.8 bushels, with production at 4,375 million.
US corn and wheat stocks are seen lower for new crop versus a month ago while bean stocks are expected to be up fractionally.
FBN’s Take On What It Means: The trade expectations for USDA’s report generally are supportive. Supplies are forecast to be far from burdensome for grains and oilseeds for the coming crop year though globally, the trade does look for boosts to corn and bean stocks. We still expect MN wheat futures to trend higher and for the winter wheat market to remain supported for now.
China July Soy Imports Decline
China's soybean imports fell in July to 8.67 million tonnes, down 14.1% from 10.09 million tonnes last year.
Negative crushing margins, which are still -200 yuan (-$30.96) per tonne, have limited soybean demand.
For the first seven months of the year, soybean imports totalled 57.63 million tonnes, up 4.5% from the previous year.
Buyers increased purchases of soybeans early in the year, expecting strong demand from a fast recovering hog herd.
Hog margins in the major hog producing northeastern region remained negative at -201 yuan per tonne.
The agriculture ministry reported the sow herd at 45.6 million head at the end of June, which was 2% higher than at the end of 2017 before ASF decimated the herd.
China’s goal is to maintain the nationwide breeding sow herd at around 43 million head through 2025 and not allow it to drop below 40 million.
FBN’s Take On What It Means: Falling hog margins and more wheat in the feed ration have decreased soymeal demand in recent months. China is advising pig farmers to market less productive animals when their sow herd rises which could lead to further liquidation. We still expect that demand in China will remain elevated over the next several years as population and incomes continue to grow.
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