USDA Reports Preview

With summer flying by, the August World Agricultural Supply and Demand Estimates (WASDE) and accompanying Crop Production reports are almost here, set for release at 11 a.m. CDT Friday, Aug. 11. For corn and soybeans, the August WASDE report is known as the first report that USDA takes a semiserious crack at yield estimates, helped by a survey of over 15,000 producers in late July and early August. Field data won't be used until September, but this report will give upcoming crop tours both a guide and a mark to compare to.

CORN

Just a month ago, USDA lowered the corn yield estimate from 181.5 bushels per acre to 177.5 bushels per acre, "lowered to reflect extreme dryness in June." At the time, the yield estimate still looked high, while young corn leaves were rolled up in dry fields. Now, it looks like USDA's patience was the right approach. On Monday, Aug. 7, DTN's Digital Yield Tour with Gro Intelligence estimated a national corn yield of 177.0 bushels per acre, very close to USDA's July estimate. Extensive data from Gro shows a remarkable rebound in crop conditions, thanks to rains and milder temperatures in July and early August.

For Friday, Dow Jones' survey of 18 analysts expects USDA to lower the U.S. crop estimate from 15.320 billion bushels (bb) to 15.126 bb, based on a lower yield of 175.4 bushels per acre. If we're tempted to argue about small differences, this isn't the time. Based on 41 years of estimating U.S. corn production, the 90% confidence interval for USDA's August estimates are a wide plus or minus 10.9%. The crop isn't done developing yet, and making big estimates on a limited sample of fallible assessments has its shortcomings. It would be interesting if USDA would be more transparent about the survey responses they do receive, but as it is, traders are left to trust a complicated, bureaucratic process.

With a slightly smaller corn crop, Dow Jones' survey expects a slight reduction in old-crop ending stocks, from 1.402 bb to 1.400 bb, apparently expecting no changes in demand. New-crop ending stocks are expected to be reduced from 2.262 bb to 2.179 bb, a bearish amount that would be the highest in five years, if true. As often happens in a new season, USDA's corn demand estimates look a bit rosy, but probably won't be adjusted in August.

For world ending corn stocks, Dow Jones' survey expects a slight increase, from 314.12 million metric tons (mmt) to 314.2 mmt (12.37 bb), the most in five years. Brazil remains on track for record production and, with escalated fighting in the Black Sea, the corn estimates for Ukraine will continue to get attention.

SOYBEANS

For soybeans, DTN's Digital Yield Tour with Gro Intelligence estimated a national yield of 51.0 bushels per acre on Aug. 7, kept high by recent rains that came at a good time for soybeans. Dow Jones' survey expects USDA to reduce the soybean crop estimate from 4.300 bb to 4.238 bb, based on a similar yield of 51.2 bushels per acre. If Dow Jones analysts are correct, it will be the smallest U.S. soybean crop in three years, limited by this year's low planting of 83.5 million acres.

As with corn, Dow Jones' survey doesn't expect much change in old-crop soybean stocks, going from 255 million bushels (mb) to 250 mb. New-crop ending soybean stocks are expected to be lowered from 300 mb to 261 mb, the result of a smaller crop USDA may or may not agree with. For USDA's snapshot of world soybean stocks in the fall, the estimate is expected to be reduced from 120.98 mmt to 120.0 mmt (4.72 bb), a record total.

WHEAT

This is a busy time of year for wheat, as the Northern Hemisphere is just finishing the winter wheat harvest and starting the spring wheat harvest. At the same time, there is no lack of threat around the Black Sea as Russia continues to attack multiple sites around Ukraine, including grain infrastructure at ports. With outside help obtaining weapons, Ukraine has not been shy about fighting back and has also taken the fight to the Black Sea.

When USDA releases its next round of world wheat estimates at 11 a.m. CDT Friday, the ending stocks estimate is only expected to drop slightly, from 266.53 mmt to 266.0 mmt (9.77 bb). Even so, there will be a lot of moving parts to notice, and traders will be interested in the new-crop and export estimates, including possible reductions in India and China.

The U.S. wheat production estimate is expected to stay close to last month's 1.739 bb, tied with the third-smallest crop in 20 years. The U.S. estimate of winter wheat is expected to be slightly higher, at 1.210 bb, broken down as follows: Hard red winter wheat at 579 mb, soft red winter wheat at 424 mb, white wheat at 208 mb. Other spring wheat is expected at 473 mb and durum at 55 mb. For spring wheat, the crop estimate is the second lowest in 35 years. Also keep in mind USDA's NASS may adjust wheat acreage estimates in the August Crop Production report after reviewing data from the Farm Service Agency and Risk Management Agency. For corn and soybeans, a similar review takes place in September.

For all three crops, the August WASDE report is still young in the estimating process, and we can't rule out possible surprises from USDA. After the July WASDE report, we saw traders make the mistake of over-responding to immature estimates, and I can't say that won't happen again.

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Instead of getting caught up in the emotion of the day, join us for DTN's webinar at 12:30 p.m. CDT Friday as we go through the numbers, discuss what they mean and talk about which estimates are reasonable and which are not. Questions are welcome and registrants will receive a link later for viewing at their convenience. Register here for Friday's August WASDE and Crop Production reports webinar: https://www.dtn.com/….

Todd Hultman can be reached at todd.hultman@dtn.com

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