On Thursday, the USDA released the July WASDE report, which offered a few key updates to the global corn crop. Today’s report stood out thanks to the significant cut to global stocks and the USDA’s decision to not alter its yield expectation.
Here’s our breakdown of the numbers.
The USDA’s July WASDE report showed the market that American farmers will produce 14.23 billion bushels of corn in 2018. This figure is higher than what the USDA reported in June 2018. The agency increased its forecast by 190 million bushels.
Compared to the five-year average of 14.28 billion bushels, 2018/19 American corn production will be marginally lower.
From a demand perspective, we can look to ending stocks to get an idea of where we sit.
For American corn, average trade expectations before the report were 1.712 billion bushels, but the USDA says that actual 2018/19 carryout will come in at 1.55 billion bushels. This would be a 23% decline from last year’s carryout of 2.03 Billion bushels!
From a global carryout perspective, 2017/18 corn stocks are pegged at 191.73 MMT. That figure is about 310,000 MT than the average projection ahead of the report.
The agency says that 2018/19 global ending stocks will come in at 151.96 MMT. This is 2.7% lower from the pre-report average guesstimate of 156.27 MMT.
A few other key points from the report:
– The USDA cut U.S. ending stocks from 40.07 MMT to 39.43 MMT. It also hiked American export expectations from 53.34 MMT to 56.52 MMT.
– The agency made no revisions to expected production out of Brazil or Argentina. The most sizeable and noticeable change regarding the two South American producers was an increase in expected ending stocks in Brazil. The agency hiked Brazilian ending stocks from 8.72 MMT to 9.22 MMT. It’s important to take the ongoing trucking challenges into consideration when exploring the motivation for the agency’s hike.
– Dry weather has affected production expectations in the FSU-12 nations. The agency cut its estimate for former Soviet Union nations from 49.5 MMT to 46.5 MMT. The agency did, however, increase EU production estimates from 61 MMT to 61.5 MMT.