Market reacts to July WASDE: Drop in corn, soybean and wheat prices

The US Department of Agriculture (USDA) released its latest World Agricultural Supply and Demand Estimates​​ (WASDE) publication yesterday.

According to the forecasting from the agency, there will be more grains around in the US at the close of 2023/24 than the market had expected, and despite the drought-hit start to the Midwest spring crop growing season, said CRM Agri, in a review.

The USDA was less generous on the global picture, particularly for wheat, for which the agency reduced world carryout stocks for 2023/24 to an eight-year low, noted those analysts.

Corn​

In terms of corn, for the US, it cut its forecast for this year’s domestic yield by 0.25t per hectare.

“However, the downgraded yield of 11.14t per hectare still represents a record high and was above the 11.05t-per-hectare number that investors had expected.”

The USDA said that research showed that harvested-area-weighted June precipitation data for the major Corn Belt states represented an extreme downward deviation from average but that timely rainfall and cooler than normal temperatures for some of the driest parts of the Corn Belt during early July is expected to moderate the impact of June weather.

Factoring in the extra corn sowings identified in the June 30 acreage report, the US harvest this year was upgraded by 1.4Mt to 389.1Mt.

“Still, the upward impact on the carryout stocks figure was tempered by an increased figure for feed use of corn this season, with inventories seen ending 2023/24 at 57.4Mt, an upgrade of a modest 127Kt from last month’s forecast, if a figure ahead of market expectations nonetheless.”

The relatively flat US stocks estimate was reflected in world stocks forecast of 314.1Mt, little changed month on month and in line with market expectations, said the CRM Agri team.

Soybeans​

The USDA forecast for the US soybean harvest this year, while lowered by 5.7Mt to 117.1Mt, exceeded forecasts too, they remarked.

The downgrade included the lower-than-expected sowings number revealed in that June acreage report, but the USDA maintained its yield estimates, at a record 3.5t per hectare.

The agency cut its US soybean export forecast by 3.4Mt to 50.3Mt, and it shrunk its carryout stocks forecast for 2023/24 by less than the market had forecast, to 8.2Mt, said the UK analysts.

World soybean stocks figure of 121.0Mt for 2023/24 came in a little short of market expectations, they added.

Wheat​

For wheat, the USDA estimated its (ongoing) harvest-23 above the level that investors had expected, while the forecast for US wheat stocks at the close of 2023/24 also surprised, with the agency raising its estimates by 800Kt to 16.1Mt.

However, the forecast for world stocks was cut by 4.2Mt to 266.5Mt, a figure 3.5Mt below the level speculative investors had penciled in. The upgrade to US supply hopes was more than offset by downgrades elsewhere, reported CRM Agri.

Argentinian, Canadian and EU harvests were downgraded by a combined 6.5Mt. The EU crop alone was cut by 2.5Mt to 138Mt, as ongoing dry weather has diminished yield prospects primarily in Germany, Spain, France, and Italy.

“Even so, the USDA remains more optimistic than some other commentators on EU prospects, with the EU Commission and IGC, for instance, both pegging the bloc's all-wheat crop at 136.1Mt.”