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August USDA Supply & Demand

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SOYBEANS:

The USDA Supply/demand report for beans should be considered bearish against pre-report estimates with old crop stocks reported at 255 million bushels compared to a 350 million bushel estimate, demand continues to rise on higher exports and slightly higher crush.

Soybean production was pegged at 4.060 billion bushels vs trade estimates closer to 3.942 billion. A massive yield estimate was used at 48.9 bushels per acre, just above the high end of trade expectations. Exports were revised up 30 million bushels.

For 2016/17 World Ending stocks, the USDA revised to a number 3.62 million tons higher than pre-report estimates, which is not all that burdensome. Economists pegged world bean stocks at 71.24 million tons from trade expectations for 67.62 million from 67.10 million tons last month. Days of supply remain the tightest in 3 years.

Demand came in well above trade expectations but production was big enough to offset leaving the trade still looking at August weather to dictate price direction after just 6-14 cent losses so far.

 

CORN:

The USDA Supply/demand update for corn was bearish against trade expectations as new crop ending stocks came in at 2.409 billion bushels from trade vs. a trade guess of 2.255 billion bushels and from 2.081 last month. The range of estimates was 1.967–2.653 billion.

Corn yield came in at 175.1 bu/acre from trade expectations for 170.6 bushels/acre, with a range of 168.6-175.0. Higher corn yields were driven by exceptionally high implied ear weights but only average stalk counts as the chart below illustrates.

All in, U.S. corn production was increased 600 million bushels but at the same time, demand was increased 300 million bushels! U.S. corn exports increased 125 million bushels, feed increased 175 million bushels while ethanol was unchanged all totaling a 2.1% increase!

December corn can now likely test the 2014 low of $318 but futures seem to already assume a certain amount of discount ahead of today’s report not fully understanding the inherent impact of high heat on final yields.

 

WHEAT:

The USDA supply/demand and crop updates for wheat should be considered neutral against pre-report estimates as production was higher than expected but demand offset those increases. Ending stocks came in at 1.100 billion bushels vs. expectations at 1.114 billion bushels given a range of 1.082 to 1.210 billion bushels.

All wheat production was pegged at a 2.321 billion bushels vs. expectations for 2.270 billion bushels. Export demand increased 25 million bushels and another 30 million in feed usage. World ending stocks for 2016/17 hit 252.8 million tons vs expectations for 251.63 million tons.

2015-16 USDA U.S. Grain Carryout (bln bu)
 
USDA Aug
2015-16
Average Trade Est.
Range of
Trade Est.
USDA July
2015-16
Corn
1.706
1.716
1.676-1.829
1.701
Soybeans
0.255
0.320
0.254-0.355
0.350
Wheat
0.981
 
 
0.981

 

2015-16 USDA World Grain Carryout (million tons)
 
USDA Aug
2015-16
Average Trade Est.
Range of
Trade Est.
USDA July
2015-16
Corn
 209.34
206.57
204.00-209.50
206.90
Soybeans
73.00
71.74
70.10-74.10
72.17
Wheat
 241.88
245.07
241.42-251.00
244.52



2016-17 USDA U.S. Yield (bu/acre)
 
USDA Aug
2016-17
Average Trade Est.
Range of
Trade Est.
USDA July
2016-17
Corn
175.1
170.6
168.6-175.0
168.0
Soybeans
48.9
47.5
46.7-48.8
46.7
Wheat
52.6
 
 
51.3

 

2016-17 USDA U.S. Production (bln bu)
 
USDA Aug
2016-17
Average Trade Est.
Range of
Trade Est.
USDA July
2016-17
Corn
15.153
14.757
14.580-15.146
14.540
Soybeans
4.060
3.941
3.865-4.054
3.880
Wheat
2.321
 
 
2.261

 

2016-17 USDA U.S. Grain Carryout (bln bu)
 
USDA Aug
2016-17
Average Trade Est.
Range of
Trade Est.
USDA July
2016-17
Corn
2.409
2.255
1.967-2.653
2.081
Soybeans
0.330
0.316
0.268-0.403
0.290
Wheat
1.100
1.114
1.082-1.210
1.105

 

 2016-17 USDA World Grain Carryout (million tons)
 
USDA Aug
2016-17
Average Trade Est.
Range of
Trade Est.
USDA July
2016-17
Corn
220.81
212.69
201.20-228.71
208.39
Soybeans
71.24
67.62
64.51-70.80
67.10
Wheat
252.82
251.63
244.25-255.30
253.70

 

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These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. This commentary is written as a daily marketing tool to help farmers sell the grain they raise. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Past performance and testimonials are not necessarily indicative of future results. Commodity trading involves the risk of loss, and you should fully understand those risks before trading.