USDA’s July US Wheat production and US/World Supply/Demand updates today had the usual twists and turns again this month. This involved demand changes since the USDA left both its corn and bean 2024 yield & output estimates unchanged from last month’s acreage report.

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Stronger than expected old-crop corn demand compensated for last month’s increase in US 2024 US corn plantings leaving the US ending stocks lower than trade was expecting. Limited changes in the World Board’s US soybean demand outlook led to only a very modest downward changes in the US new-crop ending stocks as the trade was anticipating.  However, higher increases in both the US winter and spring wheat crops led to a larger-than-expected 2024 US food crop output & higher US carryover than trade had expected. This led to a mixed CBOT close with corn up, wheat down sharply and soybeans in the middle.

Corn’s first surprise was the USDA’s aggressive expansion of its 2023/24 feed demand outlook by 75 million to 5.775 billion. The current strong cattle feedlot numbers and nearby market hogs along with the cash price decline during June seem to be behind this expanded USDA feed demand. The World Board also upped corn’s old-crop exports by 75 million to 2.225 billion.  This week’s US export sales only being 13 million bu from the USDA’s current 23/24 yearly forecast & only 9 weeks left in the current marketing year were likely behind the USDA’s old-crop export increase.  Ongoing strong Mexican train shipments of corn across the border were likely behind these higher exports.

Overall, these smaller US corn carryover supplies of 145 million bu helped compensate for corn’s 240 million larger 2024/25 crop that rose because of last month’s higher 1.4-million-acre US plantings.  This left just 95 million larger 2024/25 total supply.  The USDA also increased its new-crop corn demand by 75 million in feed & 25 million in exports. Instead of the trade’s 210 million larger new-crop stocks, the World Board’s 2024/25 carryover was 2.097 billion, 5 million bu lower than last month.  These stronger old-crop US demand outlooks & the USDA slicing 1 mmt from Argentina’s corn crop reduced the World Board’s 23/24 world stocks by 3.26 mmt for Oct 1.  These smaller supplies were behind corn’s buoyancy today.  

Soybean’s US old and new-crop ending stocks were slightly lower than the trade’s average estimates, but remained sizable vs recent years This prompted a defensive close.  The World Board only sliced 5 million bu from beans’ old-crop imports and dipped its 2024 US bean output by 15 million.  These were the only two changes in soybeans’ old & new crop balance sheets. Overall, this reduced new-crop beans stocks by 20 million to 435 from last month, but this carryover outlook remains large vs recent years. On the world level, the USDA sliced 500,000 tones from Argentina’s bean crop to 49.5 mmt, but they left their Brazilian output unchanged at 153 mmt despite the heavy flooding that occurred in RGDS early this year.

This month’s US wheat production update was the shocker.  A higher total US wheat crop was expected, but the size of the increase of the trade’s expectation of 99 million bu wasn’t on the radar.  The shifting increase of 700,000 larger hard red harvested area while soft red slipped by 260,000 acres in IL & IN wasn’t anticipated to increase the US winter wheat output by 46 million bu 1.341billion.  Increasing 30-40 bu wheat area while reducing 80 bu wheat area in the ECB doesn’t normally prompt a higher overall WW crop.  Adding to the total US wheat output this month was the dramatic jump in spring and durum wheat.  The World Board had been carrying this 2 varieties output at 580 million bu while the trade was expecting a 596 million output today.  However, this month’s USDA projection for spring is 578 million with 53.1 yield and 89 million durum output with a 42.7 bu yield.  This month’s spring yield is 4.5 bu above the previous US record for this variety while the World Board’s spring projection was 77 million over the trade’s forecast.  Durum’s USDA output was 14 million higher than the trade.  

Overall, these 133 million larger US wheat supplies increased this food grains ending stocks by 98 million to 856 million bu.  The USDA did slice 15 million from wheat’s likely US imports, increased US feed demand by 10 million to 110 million and raised its export outlook by 25 million to 825 million, but these larger supplies pressured near-by prices back to their recent lows (MGE) or slightly lower (CHG & KC).  With the bulk of the US wheat harvest behind us, limited producer US marketing & N Hemisphere crop update will likely be the market’s price factors.  No changes were made in Black sea crop sizes while EU was shaved 500,000 tons and Canada was raised 1 mmt.   The biggest World wheat crop increase was 3.6 mmt in the US. The World wheat stocks rose to 257 mmt, but remain the lowest since 2015/16 crop year.

Heat and limited rains in the forecast for the Midwest this weekend. The weather in the last half of July will be the next big price factor.   Weather scares remain likely, particularly for the ECB if a heat wave would develop.  We will be looking to utilize weather scares to market the remaining 10-15% of your old-crop corn & soybeans supplies. Currently looking at the $4.27-35 Sept and $11.40-50 Aug areas.  Hold your new crop sales at 15-20% from the $4.95-$5.00 & $12.25-30 levels.  Hold your final 10% of your US 2023 Chicago & KC wheat sales for a post-harvest recovery to $6.15-25 levels in Sept wheats. Keep your 2024/25 wheat sales at the previous 25-30% level.    

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