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Market Analysis

The USDA continued their long held cautious approach to changing their July US & World production and balance sheet levels. Despite lower June US quarterly corn & soybean stocks than expected, the World Board reduces its old-crop export outlooks which raised beans and prompted just a modest decline in corn’s 2022/23 ending stocks. The USDA did drop its 2023 US corn yield by 4 bu to 177.5, but left its 52 bu bean yield unchanged. Late season years in the Plains, ECB and SE boosted US winter wheat’s output by 70 million cu, but wheat’s US 2023/24 ending stocks of 592 million bu remain the smallest since 2013.

This month’s US 2023 soybean crop was cut 210 million bu because of June’s 4 million smaller plantings. However, no change in their 52 bu 2023 bean yield was made despite poor current crop ratings. Interestingly, old-crop stocks were upped by 25 million to 255 million when the USDA increased imports by 5 million & dropped exports by 20 million bu. This limited new-crop’s 2023/24 decline of US supplies to 185 million bu. Optimism about a larger 2024 S Am’s bean crop seems to be behind why the USDA dropped US exports by 125 milion bu. This meant only a 50 million drop in the US 2024 stocks to 300 million.

The USDA did increase corn’s old-crop feed demand by 150 million because of June’s lower quarterly stocks. However, they also cut old-crop demand by 75 million lower exports & 25 million smaller ethanol usage. Overall, corn’s 2023 carryover was only lowered by 50 million bu to 1.402 billion. This month’s lower 2023 corn yield did curtail the impact of June’s 2.1 million rise in US acreage. However, the USDA’s 15.32 billion (up 55 million) forecast countered old-crop’s 50 million lower stocks leaving 2024’s stocks virtually unchanged at 2.262 billion bu (+ 5million).

Late season rains boosted winter wheat prospects, but dryness & acreage changes limited spring & durum wheat’s output rise to just 4 million for a 1.739 billion crop. An 18 million lower carryover & 20 million larger feed usage level were behind July’s modest 30 million rise in stocks.

What’s Ahead:

Without any dramatic yield changes in corn (-4 bu), soybeans (unchanged) and a rise in wheat (1.2 bu), CBOT prices slumped after July’s USDA updates didn’t tighten new-crop carryovers very much. With corn pollination & pod setting ahead, prices will be sensitive to central US weather.

Use $4.95- $5.05 Dec prices to finalize old-crop and 30-40% of corn sales. Hold bean and wheat sales.

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