USDA Report Reaction: Bigger U.S. Corn and Soybean Crops Pressure Markets

Posted on 08/10/2018 12:12 PM

Market reaction

Ahead of USDA's report, corn futures were trading around 3 cents lower, soybeans were around 8 cents lower, winter wheat futures were mostly 2 to 4 cents higher, spring wheat futures were around a penny lower and cotton futures were just above unchanged.

In reaction to the reports, corn futures are 7 to 8 cents lower, soybeans are 33 to 35 cents lower, winter wheat futures are 6 to 9 cents lower, spring wheat is 9 to 13 cents lower and cotton futures are 100 to 115 points lower.

 

Crop production

Corn: 14.586 billion bu.; trade expected 14.411 billion bu.
— compares to 14.604 billion bu. in 2017
Beans: 4.586 billion bu.; trade expected 4.407 billion bu.
— compares to 4.392 billion bu. in 2017
Cotton: 19.235 million bales; trade expected 18.39 million bales
— compares to 20.92 million bales in 2017
All wheat: 1.877 billion bu.; trade expected 1.850 billion bu.
— compares to 1.881 billion bu. in July; 1.741 billion bu. in 2017
All winter wheat: 1.189 billion bu.; trade expected 1.180 billion bu.
— compares to 1.193 billion bu. in July; 1.269 billion bu. in 2017
HRW: 661 million bu.; trade expected 656 million bu.
— compares to 657 million bu. in July; 750 million bu. in 2017
SRW: 292 million bu.; trade expected 302 million bu.
— compares to 303 million bu. in July; 292 million bu. in 2017
White winter: 236 million bu.; trade expected 230 million bu.
— compares to 232 million bu. in July; 227 million bu. in 2017
Other spring wheat: 614 million bu.; trade expected 601 million bu.
— compares to 614 million bu. in July; 416 million bu. in 2017
Durum: 73 million bu.; trade expected 74 million bu.
— compares to 75 million bu. in July; 55 million bu. in 2017


USDA came out swinging with its first survey-based corn yield estimate, landing it at a record 178.4 bu. per acre. That’s up 1.8 bu. from last year… which is the standing final record yield. Record corn yields are expected in Alabama, Illinois, Nebraska, Ohio, South Dakota and Tennessee. USDA says the highest ear population on record in the 10 objective yield states drove the push to a new record yield estimate.

Looking at the state-by-state yields, corn yields are expected to increase from last year in Illinois (up 6 bu. at 207 bu.), Indiana (up 6 bu. at 186 bu.), Nebraska (up 15 bu. at 196 bu.), North Dakota (up 9 bu. at 148 bu.), Ohio (up 3 bu. at 180 bu.), South Dakota (up 25 bu. at 170 bu.) and Wisconsin (up 3 bu. at 177 bu. per acre). Steady with year-ago yields are expected in Iowa (202 bu. per acre). Yields are expected to decline from 2017 in Kansas (down 3 bu. at 129 bu.), Michigan (down 1 bu. at 158 bu.), Minnesota (down 3 bu. at 191 bu.) and Missouri (down 39 bu. at 131 bu.).

USDA followed up the record corn yield estimate with the second-highest bean yield estimate on record at 51.6 bu. per acre. Record yields are expected in Alabama, Illinois, Indiana, Kentucky, Mississippi, Nebraska, Ohio and Pennsylvania. Yield increases from year-ago are expected in Illinois (up 6 bu. at 64 bu.), Indiana (up 4 bu. at 58 bu.), Iowa (up 2.5 bu. at 59 bu.), Michigan (up 3.5 bu. at 46 bu.), Minnesota (up 2 bu. at 49 bu.), Nebraska (up 3.5 bu. at 61 bu.), North Dakota (up 4 bu. at 38 bu.), Ohio (up 6.5 bu. at 56 bu.), South Dakota (up 6 bu. at 49 bu.) and Wisconsin (up 3 bu. at 50 bu. per acre). Yield decreases from year-ago are expected in Arkansas (down 1 bu. at 50 bu.), Kansas (down 1 bu. at 36 bu.) and Missouri (down 4 bu. at 45 bu. per acre).

USDA puts the national average wheat yield at 47.4 bu. per acre, down 0.1 bu. from last month. USDA left estimated harvested acres unchanged from last month.

USDA puts the national average cotton yield at 911 lbs. per acre, up 6 lbs. from last year. Harvested acres on cotton were cut 370,000 from the July projection.

U.S. carryover

Corn: 2.027 billion bu. for 2017-18; unch from 2.027 billion bu. in July
— 1.684 billion bu. for 2018-19; up from 1.552 billion bu. in July
Beans: 430 million bu. for 2017-18; down from 465 million bu. in July
— 785 million bu. for 2018-19; up from 580 million bu. in July
Wheat: 1.100 billion bu. for 2017-18; unch from 1.100 billion bu. in July
— 935 million bu. for 2018-19; down from 985 million bu. in July
Cotton: 4.40 million bales for 2017-18; up from 4.0 million bales in July
— 4.60 million bales for 2018-19; up from 4.0 million bales in July

On old-crop corn, USDA made no change to the supply- or demand-side of the balance sheet. The national average on-farm cash price range is now set at $3.35 (up a nickel) to $3.45 (down a nickel from last month).

On new-crop corn, carryover is estimated 132 million bu. above last month and is 48 million bu. above the average pre-report trade estimate. Total new-crop supplies are up 357 million bu. from last month due to the larger crop. Feed & residual use was increased 100 million bu. from July (to 5.525 billion bu.) and exports are now put at 2.350 billion bu., up 125 million bu. from last month. The national average on-farm cash corn price for 2018-19 is estimated at $3.10 to $4.10, down 20 cents on both ends of the range from last month.

For old-crop soybeans, USDA cut 35 million bu. from last month, leaving the estimate 30 million bu. below the average pre-report trade estimate. USDA increased estimated old-crop crush by 10 million bu. (2.040 billion bu.) and increased old-crop bean exports by 25 million bu. (to 2.110 billion bushels). The national average on-farm cash bean price for 2017-18 was unchanged from July at $9.35.

New-crop soybean carryover of 785 million bu. is up 205 million bu. from last month and is 147 million bu. above the average pre-report trade estimate. Thanks to the bigger crop estimate, total supplies are up 240 million bu. from last month. That increase in supply was partially offset by a 15-million-bu. increase in estimated new-crop crush (2.060 billion bu.) and a 20-million-bu. jump in estimated exports (also 2.060 billion bushels). The national average on-farm cash bean price for 2018-19 is now put at $7.65 to $10.15, down 35 cents on both ends of the range from last month.

Wheat carryover for the 2018-19 marketing year was cut 50 million bu. from last month and is 26 million bu. below the average pre-report trade estimate. Total supplies were cut 5 million bu. from last month due to the slight reduction in the U.S. wheat crop estimate. On the demand side, USDA increased estimated food use 5 million bu. (to 970 million bu.) and estimated exports by 25 million bu. (to 1.025 billion bushels). Those increases in demand were partially offset by a 10-million-bu. cut to estimated feed and residual use to 120 million bushels. The national average on-farm cash wheat price for 2018-19 is put at $4.60 to $5.60, up a dime on both ends of the range from last month.

Old-crop cotton carryover was increased 400,000 bales from last month. Domestic use was trimmed 100,000 bales (to 3.25 million bales) and exports were cut by 350,000 bales (to 15.85 million bales). Those demand cuts were partially offset by a 50,000-bale increase in “unaccounted use.” The national average old-crop cash cotton price is steady with last month at 68 cents.

New-crop cotton carryover was increased 600,000 bales from last month with total supplies up 1.13 million bales. On the demand side, estimated exports were increased 500,000 bales (15.5 million bales) and “unaccounted use” was increased 30,000 bales. The national average on-farm cash cotton price for 2018-19 is put at 70 cents (up 2 cents) to 80 cents (down 2 cents from last month).

Global carryover

Corn: 193.33 MMT for 2017-18; up from 191.73 MMT in July
— 155.49 MMT for 2018-19; up from 151.96 MMT in July
Beans: 95.61 MMT for 2017-18; down from 96.02 MMT in July
— 105.94 MMT for 2018-19; up from 98.27 MMT in July
Wheat: 273.07 MMT for 2017-18; down from 273.50 MMT in July
— 258.96 MMT for 2018-19; down from 260.88 MMT in July
Cotton: 84.51 million bales for 2017-18; down from 84.96 million bales in July
— 77.10 million bales in 2018-19; down from 77.84 million bales in July

 

Global production highlights

Argentina beans: 37.0 MMT for 2017-18; compares to 37.0 MMT in July
— 57.0 MMT for 2018-19; compares to 57.0 MMT in July
Brazil beans: 119.5 MMT for 2017-18; compares to 119.5 MMT in July
— 120.5 MMT in 2018-19; compares to 120.5 MMT in July
Argentina wheat: 18.0 MMT for 2017-18; compares to 18.0 MMT in July
— 19.5 MMT in 2018-19; compares to 19.5 MMT in July
Australia wheat: 21.3 MMT for 2017-18; compares to 21.3 MMT in July
— 22.0 MMT in 2018-19; compares to 22.0 MMT in July
China wheat: 129.77 MMT for 2017-18; compares to 129.77 MMT in July
— 128.0 MMT in 2018-19; compares to 128.0 MMT in July
Canada wheat: 30.0 MMT for 2017-18; compares to 30.0 MMT in July
— 32.5 MMT in 2018-19; compares to 32.5 MMT in July
EU wheat: 151.68 MMT for 2017-18; compares to 151.58 MMT in July
— 137.5 MMT for 2018-19; compares to 145.00 MMT in July
Russia wheat: 84.99 MMT for 2017-18; compares to 84.99 MMT in July
— 68.0 MMT for 2018-19; compares to 67.0 MMT in July
Ukraine wheat: 26.98 MMT for 2017-18; compares to 26.98 MMT in July
— 25.5 MMT for 2018-19; compares to 25.50 MMT in July
China corn: 215.89 MMT for 2017-18; compares to 215.89 MMT in July
— 225.0 MMT for 2018-19; compares to 225.0 MMT in July
Argentina corn: 33.0 MMT for 2017-18; compares to 33.0 MMT in July
— 41.0 MMT for 2018-19; compares to 41.0 MMT in July
South Africa corn: 13.8 MMT for 2017-18; compares to 13.8 MMT in July
— 13.5 MMT for 2018-19; compares to 14.0 MMT in July
Brazil corn: 83.0 MMT for 2017-18; compares to 83.5 MMT in July
— 94.5 MMT for 2018-19; compares to 96.0 MMT in July
China cotton: 27.50 million bales for 2017-18; compares to 27.50 million bales in July
— 26.5 million bales for 2018-19; compares to 26.50 MMT in July

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