July 12 – Corn Prices Slump After USDA Crop Report

Corn prices fell by double-digits on Wednesday after traders reacted negatively to the USDA’S July WASDE report. Soybean prices and wheat prices also declined as investors turned their attention away from weather events and focused on updates from the agricultural agency.

Here’s a recap of today’s trading and the USDA’s July Crop Report.

Corn Prices Drop on Crop Report

The July 12 World Agricultural Supply and Demand Estimates report indicated strong corn production for the 2017/18 calendar. The USDA estimates production at 14,255 million bushels.

That figure is an increase of 190 million bushels from previous forecasts. The new production expectation reflected the uptick in acreage and plantings from the agency’s June 30 report.

In Chicago, the July corn futures contract fell 16 cents to $3.76. The September futures contract fell a little more than 16 cents to $3.84. The December futures contract fell more than 15 cents to finish at $3.98 per bushel.

The agency left expected corn yields unchanged at 170.7 bushels per acre. However, one can anticipate that the agency may reduce this figure in the future as it takes into account other variables in the future.

During a conversation with AgWeb, Jerry Gulke, president of the Gulke Group, explained that the United States lowered its carryover. Gulke also explained that a decline in yield by just two bushels, we will see a wipeout in any corn inventory that the agency forecasted in the July 12 report. [1]

On the international front, it looks like Brazil will approach record production in corn. According to Anec, the nation will export roughly 30 million tons, which would match its record export levels in 2015. A bumper crop in the winter months could see the nation export four million to five million tons between the months of July and February, according to an analyst at Celeres. [2]

Soybean Prices Slump, Brazil Crop Still Immense

Soybean prices fell Wednesday after a busy day of trading.

The USDA made no changes to expectations for Argentina and Brazil soybean crop production. The agency has still pegged Argentinean soybean production at 57.8 million metric ton and 114 million metric tons in Brazil. The agency also hiked production expectations in China.

Like its corn report, the USDA did not adjust yield estimates. The agency may be waiting for greater insight into the long-term effect of weather.

The July soybean futures contract fell by 8.4 cents to close at $10.16. The September futures contract dipped another nine cents to close at $10.25.

The USDA July Supply/Demand Report indicated that supplies of soybeans tightened this month. For 2016/2017 production, the agency forecasted soybean stocks registering at 410 million bushels. That is down nearly 10% from its June estimate of 450 million bushels.

The agency estimated stocks for 2017/2018 at 460 million bushels, down from the 495 million in the June estimate.

Given that yields remained unchanged and the agency expanded the supply estimates, traders largely ignored the storage figure. Traders will now turn their attention to the weather this week.

Wheat Prices Decline in Chicago and Kansas City

Today’s USDA report also indicated a sharp year-over-year decline in production.

The expectations for winter wheat production were up 2% to 1.28 billion bushels from the June 1 forecast. Still, that figure is 23% off from this period last year. That didn’t stop the downturn for wheat prices today.

The July SRW wheat futures contract at the Chicago Board of Trade declined 13 cents to finish at $5.22. The September SRQ wheat futures contract dipped 16 cents to $5.37.

The Spring wheat contract for July dropped 14.75 cents and finished at $7.82.

The USDA did adjust yield expectations for winter wheat, hiking it to 49.7 bushels per acre. That figure is a 0.8% increase from last month’s estimate.

The agency pegged Hard Red Winter wheat production at 758 million bushels. That is a 2% increase from last month. The July hard red winter wheat futures contract in Kansas City fell 13 cents to $5.28.  The September contract fell 13.5 cents to $5.44.

Meanwhile, Soft Red Winter is forecasted at 306 million bushels. This was up 3% from last month’s forecast.

Durum wheat production is expected to hit 57.5 million bushels. The new figure is off 45% from last year’s production levels. The USDA also set the yield expectations at 30.9 bushels per acre. This figure is a little more than 13% lower than last year’s yield.

Oil Prices Push Higher

Finally, oil prices continued to climb after news broke that the United States’ crude inventory levels decline significantly last week. The Energy Information Administration reported that crude stocks fell by 7.3 million barrels last week. That was more than two times what analysts expected. The report comes a day after the American Petroleum Institute reported a similar decline and the European Union indicated a sharp drop in their inventory levels. The reports provide some relief for oil traders who were concerned about global demand.

About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

Most Recent Posts
Aug 16 – Wheat Exports and the Trade War’s Impact
August 16, 2019 Brennan Turner
As we investigate vegetable oils and wheat exports this morning, grain prices are mostly higher as the traders buy up some bargain prices.
October 4: Corn Prices Edge Higher With October WASDE in Focus
October 04, 2018 Garrett Baldwin
Corn prices ticked higher Thursday as traders and analysts began to speculate on next week’s release of the October WASDE report.
Accounting for Weather Ahead of Corn & Soybean Plant 2019
March 18, 2019 Brennan Turner
While the trade war is still grabbing a lot of headlines, it's the recent volatile weather that is starting to help grain prices improve.