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USDA Reports Review
By Dana Mantini
Wednesday, June 12, 2024 2:54PM CDT

The USDA June World Agricultural Supply and Demand Estimates (WASDE) report was expected to show higher wheat production on reports of solid yields and test weight in the early Texas and Oklahoma hard winter wheat harvests -- and that is just what we got. The expectation of that had sent wheat prices reeling for the ninth time in the past 11 days for July Kansas City wheat. Once the report was released, wheat maintained the losses despite the expected bullish changes to world wheat production.

Let's take a look at some of the changes in both U.S. and world numbers on the June 12 USDA report, starting with corn.

CORN:

For the U.S. corn balance sheet, there were no changes from May with corn production at 14.860 billion bushels (bb) and yield remaining at a record large 181 bushels per acre (bpa). Ending stocks for both 2023-24 and 2024-25 were left untouched at 2.022 bb and 2.102 bb, respectively. Traders were expecting a small upward change in exports and corn for ethanol usage and got neither. It is likely we will see some acreage and possible yield adjustments in the next report.

On the world front, traders expected more of a change to Argentine and Brazil corn production, but those were left unchanged from May at 122 million metric tons (mmt) (4.8 bb) for Brazil and 53 mmt (2.08 bb) for Argentina. There had been much talk about stunt disease dropping Argentina's crop dramatically, but no such change came. In Brazil, the ag company CONAB has Brazil's corn crop under 113 mmt (4.45 bb), but USDA was content to stay at 122 mmt. With Dow Jones traders expecting 2024-25 ending stocks to fall to 311.3 mmt, the USDA came out with 500,000 mt less at 310.8 mmt (12.23 bb).

SOYBEANS:

As in corn, there were few substantive changes to the U.S. soy balance sheet, For the 2023-24 crop year the USDA did drop soybean crush by 10 million bushels (mb), to 2.290 bb, with that change going right to the ending stocks. The resulting higher carry-in led to a 2024-25 ending stocks number of 455 mb -- up 10 mb, right in line with trade expectations. Production and yield were left unchanged at 4.450 bb and 52 bpa.

On the world side, while Brazil soybean production was dropped 1 mmt to 153 mmt (5.62 bb) -- still higher than trade expectations of 151.8 mmt and far higher than the last CONAB estimate of 147.7 mmt (5.43 bb). CONAB will be out on Thursday morning with its updated estimate. Argentina's soy production, expected to be lowered modestly, stayed the same at 50 mmt (1.84 bb). The world ending stocks number for 2024-25 came in at 127.9 mmt (4.7 bb) -- down from 128.5 mmt in May. The average farm price for soybeans was left unchanged at $11.20 per bushel, as were the averages for bean oil at 42 cents and soymeal at $330 per ton.

WHEAT:

Prior to the WASDE report release, the wheat market was trading sharply lower with July KC wheat leading the way. Traders had expected the USDA to raise winter wheat production, based on early and optimistic yield reports from the early hard red winter (HRW) wheat harvest. The instinct of early morning wheat sellers proved correct, with the USDA raising all wheat production by 17 mb from May. The lion's share of the gain was realized in HRW wheat production, which was 19 mb higher than in May. Small reductions in both soft red winter and white wheat production were reported. More than offsetting the production gain was an increase of 25 mb in exports for 2024-25 to 800 mb. That led to an ending stocks number of 758 mb for 2024-25, and about 24 mb below Dow Jones survey expectations. The season average price for wheat was raised by 50 cents per bushel, to $6.50 per bushel.

Most of the significant changes came globally but were not totally unexpected. Due to the recent and expanding drought, and several frost-freeze events in both southern Russia and eastern Ukraine, those crops were lowered. Russian wheat fell from 88 mmt (3.23 bb) in May to 83 mmt (3.05 bb) on Wednesday, with Ukraine production cut by 1.5 mmt to 19.5 mmt (716 mb). The European Union crop was lowered by 1.5 mmt to 130.5 mmt (4.8 bb), but EU exports were raised by 1 mmt as a 4.3 mmt (158 mb) drop in wheat consumption was reported due to less feed and residual use in the EU, Russia and Ukraine. Global ending stocks in wheat fell by 1.3 mmt to 252.3 mmt (9.27 bb).

FINAL THOUGHTS:

While the June WASDE report was, as is typical, not a big market-mover, with few notable changes, the market will now turn its focus on South America, Black Sea, and U.S. Corn Belt weather in coming weeks and months. The Black Sea drought appears to be expanding and a hot and dry forecast for much of the central Corn Belt into the end of June may get much more play if it extends into July and pollination time. There is the potential for Black Sea wheat supplies to shrink even more in the weeks to come, which could light a bullish fire under the plunging wheat market. Later in the month we could get a better idea on changes to not only corn and soy acres, but also yield.

At the close, July corn was up 4 3/4 cents, December corn was up 3 1/2 cents. July soybeans finished up 3/4 cent, with November soybeans down 4 1/2 cents. July Chicago wheat closed down 9 1/2 cents, Minneapolis wheat was down 9 3/4 cents, and July KC wheat fell 17 3/4 cents.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow Dana Mantini on social platform X @mantini_r


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