July WASDE report gets bearish reaction

Large corn supplies remain a burden on the market.

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The July World Agricultural Supply and Demand Estimates released Friday, July 10, were uneventful for the market.

After the big surprise drop in harvested corn acreage of 5.6 million on June 30, the market was anticipating a pullback in production. So, the 15-billion-bushel estimate was in line with expectations, nearly 1 billion bushels below June.

Ending stocks for the 2020-21 marketing year were lowered to 2.648 billion bushels, a 675-million-bushel reduction from the June report. The U.S. Department of Agriculture lowered feed and residual use which offset part of the lower production. Old crop ending stocks were raised to 2.248 billion bushels, 145 million bushels above the 2.103 bb figure in June.

John Nelson with Producers Livestock in Sioux City, Iowa, says the market reaction to the lower new crop corn ending stocks was still a bit negative because without a major weather threat, traders still perceive the ending stocks as burdensome.

“Even though the carryout was lowered on corn, 2.648 billion bushels of corn is still a big supply burden to work through,” he says.


Meanwhile, world ending stocks for corn in the 2020-21 marketing year dropped a whopping 22.9 million metric tons from June to 315 million metric tons, due in part to the U.S. revisions. World carryout for 2019-20 was also lowered by 0.9 million metric tons. USDA left Brazil and Argentina corn production static with last month at 101 mmt and 50 mmt respectively.

U.S. soybean production was pegged by USDA at 4.135 billion bushels, slightly lower than trade guesses. It was only 10,000 bushels above last month’s estimate figuring in the additional 310,000 acres from the acreage report. New crop ending stocks were raised though by 30 million bushels from last month and old crop ending stocks were bumped up by 35 million bushels. World soybean carryout came in at 95.1 million metric tons in the new crop category, a 1.2 million metric ton reduction from the previous report, while global stocks for old crop were raised 0.5 million metric ton to 99.7 million metric tons. Some of that increase came from a 2 million metric ton increase in Brazil soybean production to 126 million metric tons. Argentina’s soybean production was left unchanged at 50 million metric tons.

All wheat production was lowered to 1.824 billion bushels or 53,000 bushels from June. Winter wheat production was also dropped to 1.218 billion and other spring wheat was nearly unchanged at 550 million bushels. U.S. ending stocks in the new crop category were raised to 942 million bushels and old crop stocks were also pushed up to 1.044 billion bushels, which were both above June. World carryout for 2020-21 on wheat was lowered by 1.3 million metric tons to 314.8 million metric tons, while old crop came in at 297.1 million metric tons, which was a 1.3 million metric ton revision upward.

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