USDA WASDE Reaction 07/10/2020 | Blog

Our immediate reaction and takeaways from the WASDE Report

Few surprises in the July WASDE. Balance sheets have been updated to reflect the June 30 acreage report. Weather and trade to be the focus over the next few weeks. Soybeans have the tightest balance sheet and we’ll be watching closely as we enter the pod setting stage in August – a critical weather period for the soybean crop.

Corn

The USDA reduced the corn production estimates for 2020-2021 to accommodate the recent revision acres planted. The yield estimate of 178.5 remains unchanged, but with current hot/dry weather and not much reprieve in the forecast yield revisions may show up in next month’s report. Overall supply estimates have declined more than use leading to an ending stock estimated of 2.648 billion bushels. This figure is below the avg trade guess of 2.731 according to Bloomberg. Even so corn futures prices are lower across the curve at the time of this writing.

Wheat

Beginning stocks were revised higher more than offsetting estimates for lower production in ’20 – ’21. This led USDA to raise estimated wheat ending stocks by 17 million bushels. Globally however the outlook is for smaller supplies, lower exports, and a reduction in stocks. The trade may be placing more emphasis on the global balance sheet given that Wheat futures prices were up in the wake of the report.



Soybeans

Higher beginning stock estimates and higher production estimates led the USDA to raise the ’20-’21 carryout estimate by 30 million bushels. Still, the ’20-’21 carryout is nearly 200 million bushels lower vs the ’19-’20 estimates which suggests that there is little margin for a yield reduction this growing season. Futures prices are marginally lower as of this writing which we believe is reflective of the current tight balance sheet condition.