PF Report Reaction: USDA Data Supportive for Corn and Wheat, Negative for Beans

Posted on 07/12/2018 12:15 PM

Market reaction

Ahead of USDA's report, corn futures were trading around a penny lower, soybeans were steady to a penny lower, wheat futures were 1 to 4 cents higher and cotton was 150 to 175 points higher.

After the reports, corn futures are up 4 to 9 cents, soybeans are 2 cents lower, wheat is 2 to 10 cents higher and cotton is sharply higher to up the 400-point daily trading limit.

 

Wheat production

All wheat: 1.881 billion bu.; trade expected 1.858 billion bu.
— compares to 1.827 billion bu. in June; 1.741 billion bu. in 2017
All winter wheat: 1.193 billion bu.; trade expected 1.196 billion bu.
— compares to 1.198 billion bu. in June; 1.269 billion bu. in 2017
HRW: 657 million bu.; trade expected 650 million bu.
— compares to 650 million bu. in June; 750 million bu. in 2017
SRW: 303 million bu.; trade expected 316 million bu.
— compares to 316 million bu. in June; 292 million bu. in 2017
White winter: 232 million bu.; trade expected 229 million bu.
— compares to 232 million bu. in June; 227 million bu. in 2017
Other spring wheat: 614 million bu.; trade expected 599 million bu.
— compares to 416 million bu. in 2017
Durum: 74.9 million bu.; trade expected 72 million bu.
— compares to 55 million bu. in 2017


The first survey-based spring wheat crop estimate generated an national average yield of 47.6 bu. per acre, up 6.6 bu. from year-ago. North Dakota is expected to yield 48 bu. per acre.

The durum wheat crop is expected to yield 40.7 bu. per acre, up 15 bu. per acre from year-ago levels.

USDA increased winter wheat harvested acres 62,000 from last month. The national average winter wheat yield is down 0.4 bu. from last month at 48.0 bu. per acre.

The all-wheat yield is now estimated at 47.5 bu. per acre, up 0.6 bu. from last month. 

 

U.S. carryover

Corn: 2.027 billion bu. for 2017-18; down from 2.102 billion bu. in June
— 1.552 billion bu. for 2018-19; down from 1.577 billion bu. in June
Beans: 465 million bu. for 2017-18; down from 505 million bu. in June
— 580 million bu. for 2018-19; up from 385 million bu. in June
Wheat: 1.100 billion bu. for 2017-18; up from 1.080 billion bu. in June
— 985 million bu. for 2018-19; up from 946 million bu. in June
Cotton: 4.0 million bales for 2017-18; down from 4.2 million bales in June
— 4.0 million bales for 2018-19; down from 4.7 million bales in June

On old-crop corn, USDA cut 75 million bu. from estimated carryover from last month. The estimate is also 80 million bu. below the average pre-report trade estimate. USDA cut estimated imports by 5 million bu., to 40 million bushels. On the demand side, USDA cut another 50 million bu. from estimated feed & residual use (that now stands at 5.450 billion bu.). That was more than offset by a 20-million-bu. increase in food, seed and industrial use (to 7.060 billion bu.; corn-for-ethanol was increased 25 million bu. to 5.6 billion bu.) and a 100-million-bu. increase in estimated exports (now pegged at 2.4 billion bu.). USDA now puts the national average on-farm cash corn price for 2017-18 at $3.30 to $3.50, up a nickel on the bottom-end and down a nickel on the top-end from last month.

On new-crop corn, USDA did not increase the expected national average corn yield, leaving it steady with trendline expectations of 174 bu. per acre. Acreage estimates are up from last month, reflecting the survey work in the June Acreage Report. The increase in acres pushed expected production to 14.23 billion bu., up 190 million bu. from last month. However, with the drop in beginning stocks, total new-crop corn supplies are up “just” 115 million bu. from last month at 16.307 billion bushels.

On the demand side, USDA increased estimated feed and residual use 75 million bu. (to 5.425 billion bu.) and expected exports by 125 million bu. (to 2.225 billion bushels). That was partially offset by a 60-million-bu. cut to expected food, seed and industrial use (to 7.105 billion bu.), with 50 million bu. of that cut coming from expected corn-for-ethanol use (5.625 billion bu.). USDA puts the national average on-farm cash corn price for 2018-19 at $3.30 to $4.30, down a dime on both ends of the range from last month.

On old-crop beans, USDA cut 40 million bu. from last month’s carryover estimate. That puts the new carryover estimate 42 million bu. below the average pre-report trade estimate. On the supply-side, estimated imports were cut 3 million bushels. On the demand side, USDA increased estimated old-crop bean crush 15 million bu. (to 2.030 billion bu.) and raised estimated exports 20 million bushels (to 2.085 billion bu.). It increased seed use 1 million bu. (to 104 million bu.) and residual use 2 million bushels (to 32 million bu.). The national average on-farm cash bean price for 2017-18 is now put at $9.35, down a nickel from last month.

On new-crop beans, USDA increased projected carryover by 195 million bu. from last month. The new estimate is also 109 million bu. above the average pre-report trade estimate. USDA left the national average yield projection at 48.5 bu. per acre. The increase in acres, based on the June Acreage Report, pushed the crop projection to 4.310 billion bu., up 30 million bu. from last month. However, the cut to beginning stocks resulted in a 10-million-bu. drop in total supplies for 2018-19.

On the demand side, USDA increased projected crush by 45 million bushels (to 2.045 billion bu.). That was more than offset by a 250-million-bu. cut to estimated exports, which fell to 2.040 billion bushels. The national average on-farm cash bean price for 2018-19 is now put at $8.00 to $10.50, down 75 cents on both ends of the range from last month.

 Old-crop wheat carryover reflects the June 1 Quarter Grains Stocks estimate of 1.1 billion bu., up 20 million bu. from last month. Several final adjustments were made to the old-crop wheat balance sheet. Total supplies were increased 3 million bushels. On the demand side, seed use increased 1 milion bu (to 64 million bu.) and exporters were increased 1 million bu. (to 901 million bushels). Wheat feed & residual use was cut another 20 million bu. and stands at just 50 million bu. for 2017-18. USDA puts the national average on-farm cash wheat price for 2017-18 at $4.73, down 2 cents from last month.

On new-crop wheat, USDA increased estimated carryover 39 million bu. from last week. The new estimate is also 12 million bu. above the average pre-report trade estimate. USDA increased total supplies 74 million bu. after the first survey-based estimate of the spring wheat crop. That increase in supply was partially offset by a 10-million bu. increase in feed & residual use (to 130 million bu.) and a 25-million-bu. increase in estimated 2018-19 wheat exports (to 975 million bushels). USDA puts the national average on-farm cash wheat price for 2018-19 at $4.50 to $5.50, down a dime on both ends of the range from last month.

On old-crop cotton, USDA cut 200,000 bales from estimated carryover from last month, dropping it to 4.0 million bales. The only change made was a 200,000-bale increase in estimated exports, pushing the tally to 16.2 million bales. The price for old-crop cotton was left unchanged at 68 cents.

On new-crop cotton, expected harvested acres were cut 620,000 from last month. That was partially offset by a 4-lb. increase in projected yield, pushing yield to 845 lbs. per acre. The crop is now projected at 18.5 million bales, down a million bales from last month. On the demand side, USDA cut 500,000 bales from expected exports (to 15.0 million bales). USDA now puts the national average on-farm cash cotton price for 2018-19 at 68 cents (up 8 cents from last month) to 82 cents (up 2 cents from June).

 

Global carryover

Corn: 191.73 MMT for 2017-18; down from 192.69 MMT in June
— 151.96 MMT for 2018-19; down from 154.69 MMT in June
Beans: 96.02 MMT for 2017-18; up from 92.49 MMT in June
— 98.27 MMT for 2018-19; up from 87.02 MMT in June
Wheat: 273.5 MMT for 2017-18; up from 272.37 MMT in June
— 260.88 MMT for 2018-19; down from 266.16 MMT in June
Cotton: 84.96 million bales for 2017-18; down from 88.21 million bales in June
— 77.84 million bales in 2018-19; down from 83.02 million bales in June

 

Global production highlights

Argentina beans: 37.0 MMT for 2017-18; compares to 37.0 MMT in June
— 57.0 MMT for 2018-19; compares to 56.0 MMT in June
Brazil beans: 119.5 MMT for 2017-18; compares to 119.0 MMT in June
— 120.5 MMT in 2018-19; compares to 118.0 MMT in June
Argentina wheat: 18.0 MMT for 2017-18; compares to 18.0 MMT in June
— 19.5 MMT in 2018-19; compares to 19.5 MMT in June
Australia wheat: 21.3 MMT for 2017-18; compares to 21.5 MMT in June
— 22.0 MMT in 2018-19; compares to 24.0 MMT in June
China wheat: 129.77 MMT for 2017-18; compares to 129.77 MMT in June
— 128.0 MMT in 2018-19; compares to 129.0 MMT in June
Canada wheat: 30.0 MMT for 2017-18; compares to 30.0 MMT in June
— 32.5 MMT in 2018-19; compares to 32.5 MMT in June
EU wheat: 151.58 MMT for 2017-18; compares to 151.58 MMT in June
— 145.0 MMT for 2018-19; compares to 149.40 MMT in June
Russia wheat: 84.99 MMT for 2017-18; compares to 84.99 MMT in June
— 67.0 MMT for 2018-19; compares to 68.5 MMT in June
Ukraine wheat: 26.98 MMT for 2017-18; compares to 26.98 MMT in June
— 25.5 MMT for 2018-19; compares to 26.50 MMT in June
China corn: 215.89 MMT for 2017-18; compares to 215.89 MMT in June
— 225.0 MMT for 2018-19; compares to 225.0 MMT in June
Argentina corn: 33.0 MMT for 2017-18; compares to 33.0 MMT in June
— 41.0 MMT for 2018-19; compares to 41.0 MMT in June
South Africa corn: 13.8 MMT for 2017-18; compares to 13.5 MMT in June
— 14.0 MMT for 2018-19; compares to 14.0 MMT in June
Brazil corn: 83.5 MMT for 2017-18; compares to 85.0 MMT in June
— 96.0 MMT for 2018-19; compares to 96.0 MMT in June
China cotton: 27.50 million bales for 2017-18; compares to 27.5 million bales in June
— 26.50 million bales for 2018-19; compares to 26.5 MMT in June

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