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July WASDE optimistic for wheat but less so for corn and soybeans

The July World Agriculture Outlook Supply and Demand Estimates were bullish for wheat but neutral for soybeans and slightly bearish for corn.

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The July 2021 WASDE report was slightly bullish for wheat. (Shelby Chesnut / Grand Vale Creative LLC)

The July World Agriculture Outlook Supply and Demand Estimates were bullish for wheat but neutral for soybeans and slightly bearish for corn.

In the report released July 12, the U.S. Department of Agriculture lowered the 2021-22 U.S. wheat crop 152 million bushels to 1.746 billion bushels. The all wheat yield was pegged at 45.8 bushels per acre, down 4.9 bushels from last month. Production was lowered for other spring wheat to 345 million bushels, with the hard red spring wheat at 305 million bushels due to the severe drought conditions in the Northern Plains. This was partially offset by a 34 million bushel increase in the hard red winter wheat crop to 805 million bushels.

The NASS July Crop Production report provided survey-based production forecasts for all wheat classes for the first time in the 2021-22 crop year. Projected 2021-22 ending stocks were reduced 105 million bushels to 665 million and are the lowest since 2013-14. The projected 2021-22 season-average farm price was raised $0.10 per bushel to $6.60. Old crop ending stocks were also lowered to 844 million bushels, down 8 million from June.

Matt Bennett with AgMarket.Net said with USDA confirming a smaller wheat crop than expected, it may assume the leadership role in the complex.

The global wheat carryout declined for 2021-22 by 5.1 million metric tons to 291.7 million metric tons. Old crop stocks were also lowered nearly 3.3 million metric tons to 290.2 million metric tons.

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The national corn yield was left unchanged from June at 179.5 bushels per acre. During June, USDA says harvested-area weighted precipitation for the major corn producing states was below normal but did not represent an extreme deviation from the 1988 to 2020 average. However, production was raised 175 million bushels from June to 15.165 billion bushels, working in the higher acreage from the June 30 Acreage repor t. That resulted in a 75 million bushel increase in 2021-22 ending stocks to 1.432 billion bushels. That’s despite increased feed and residual use and exports being raised 50 million bushels with sharply lower exports expected for Brazil. The season-average farm price received by producers was lowered 10 cents to $5.60 per bushel. Old crop ending stocks were lowered by 25 million bushels to 1.082 billion bushels.

Bennett said the market was leaning bearish coming into the report, so some of the increase was already dialed in. He said the trade is anticipating eastern Corn Belt yields will make up for losses in the western Corn Belt associated with drought. However, Bennett isn’t convinced that is the case and said yield could be trimmed in future reports. So he’s unsure if this is the largest new crop ending stocks the market will see for the season.

“I’m not sure if I can say that yet because one of the big keys will be China’s demand for corn moving forward. China says they aren’t going to import as much corn because they are increasing production in their country. However, every time they say that the market pulls back and they buy our corn at a bargain,” he said.

Bennett said the trade is still optimistic the $5 level will hold in the December corn futures.

Global corn ending stocks for 2021-22 were raised to 291.2 million metric tons which is up nearly 2 million metric tons from June. USDA did lower Brazil corn production 5.5 million metric tons to 93 million metric tons, but increased Argentina’s crop by 1.5 million metric tons to 48.5 million metric tons.

Soybean production is projected at 4.4 billion bushels, unchanged from last month. USDA left their yield projection unchanged at 50.8 bushels per acre and used the acreage of 87.6 million acres in the June 30 Acreage report. New crop ending stocks were also left at the same level as June at 155 million bushels.

However, Bennett isn’t sure if USDA will have to lower soybean yields going forward, as that's largely dependent on August rains.

“I think it’s a tough call and USDA probably won’t make any changes in yield until September,” he said.

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Old crop ending stocks were also left static at 135 million bushels.

Global stocks for new crop soybeans were raised by nearly 2.0 million metric tons to 94.5 million metric tons, while old crop carryover was also raised by 3.5 million metric tons from June to 91.5 million metric tons.

Despite the report numbers, Bennett said the market is 90% tied to weather going forward and will be highly volatile as the supply is still tight for all the grains and there isn’t much room for any production errors.

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