Instant Reaction to the July WASDE Report

On Thursday, the USDA released its monthly WASDE report.

Let’s take a look at grain prices in Chicago 20 minutes before the report was released.

 – September SRW Wheat: Up 2.0 cents at $4.7375.

 – December SRW Wheat: Up 1.5 cents at $4.92 per bushel.

 – September Corn: Down 2.25 cents at $3.3775.

 – December Corn: Down 2.25 cents at $3.51 per bushel.

 – August Soybeans: Down 0.5 cents at $8.3225.

 – September Soybeans: Down 0.75 cents at 8.3725.

So what would be the best outcome today?

Well… Dave Newby has an aggressive view.

This was a fan favorite.

Anything else we need to know?

Oh.

That’s what we are here for.

That’s like asking “what’s biology” on the day of the final exam.

🙂

Let’s dive right into the numbers…

July WASDE Report

This afternoon, the USDA said that 2017/18 corn ending stocks will come in at 2.207 billion bushels. That figure is 7.5 million bushels fewer than the 2.102 billion projected in June.

The agency said 2018/19 American corn production would come in at 14.23 billion bushels. That was an increase of 190 million bushels from the previous report.

The agency did not make any change to yield expectations. The USDA says that American farmers will produce 174 bushels per acre. The agency also cut its ending stocks figure from 1.577 billion bushels down to 1.552 billion bushels.

Global stocks were also reduced. The agency cut global stocks from 154.69 MMT down to 151.96 MMT.

What else?

Following the report, corn prices for September added 6.5 cents in the first five minutes of post-WASDE trading. September corn prices were above $3.46 per bushel. The December contract added 6.75 cents to hit $3.60.

Soybean Prices Hold After WASDE

Soybean prices actually saw gains despite a bearish WASDE report for the sector. August prices added 2.25 cents in the first five minutes of post-WASDE trading.

It’s worth noting that the USDA increased expectations for the 2018/19 soybean crop down in Argentina. The agency said that Argentine production will hit 57 MMT, a figure that was 1 MMT higher than the June estimate.

The agency also increased Brazilian production to a record 120.5 MMT. That figure was increased by 2.5 MMT from the June report.

The agency also increased expectations for Chinese production. The USDA said that Chinese farmers will produce 14.5 MMT of soybeans in the 2018/19 timeframe.

The most bearish figure was on the global stocks side. The USDA says that global ending stocks for 2018/19 will come in at 98.27 MMT. This is a big jump from the 87.02 MMT that the agency reported last month.

The USDA did cut 2017/18 ending stocks down to 465 million bushels. That was a cut of 40 million bushels. 2018/19 ending stocks were hiked from 385 million bushels to 580 million bushels. The report took direct aim at the ongoing trade spat between the United States and China.

“The 2018/19 global soybean supply and demand forecasts include higher production and lower trade and crush compared to last month,” the agency said in its monthly update. “The tariff that China recently imposed on U.S. soybeans is expected to cause higher prices for soybeans in China and slower protein meal consumption growth. Lower demand and a year-over-year drawdown in stocks for China are forecast to result in a reduced crush and an 8-million-ton decline for imports to 95 million.”

Wheat Prices Whip Higher

SRW prices added 13 cents in the first five minutes of post-WASDE trading. The December contract gained 12.75 cents to tick above $5.03 per bushel.

The USDA cut global stocks expectations from 266.16 MMT to 260.88 MMT. However, the agency also increased U.S. stocks for both 2017/18 and 2018/19.

The agency also set production at 1.881 billion bushels. That figure was a modest increase from the 1.827 billion bushels noted by the agency last month.

It’s Time to Learn More

Today’s WASDE recap is just a sliver of the analysis that we’re doing today.

FarmLead’s team of agricultural economists and thought leaders are dissecting the July WASDE report for our premium members who subscribe to GrainCents.

You can get a free, three-week trial and get all of our insight on today’s WASDE report for free. We cover 12 different crops.

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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.

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