USDA's Aug. 12 World Agricultural Supply and Demand Estimate (WASDE) report resulted in the biggest surprise in the soybean market, where a combination of 1 million harvested acres more than estimated in July, along with a record yield and production, sent November soybean futures plunging to another new contract low. USDA's corn and wheat estimates were more neutral to slightly bullish.
Let's look at some of the changes in both U.S. and world numbers in the August USDA WASDE report by crop.
CORN
Corn futures were able to withstand the record-high corn yield as reported in the August WASDE report and traded higher for much of the day. USDA pegged the corn yield at a record-large 183.1 bushels per acre (bpa), about 1 bpa higher than trade expectations. Harvested acres fell more than expected by 700,000 to 82.7 million acres. That meant production reached 15.147 billion bushels (bb) -- 47 million bushels (mb) higher than estimated in July. If that turns out to be correct, it would be the third-highest production for corn. The 183.1 bpa yield figured 5.8 bpa higher than a year ago, as Illinois, Iowa, Indiana, Missouri, Nebraska and South Dakota all had higher yields than a year ago. U.S. corn exports were raised by 25 mb in the old-crop slot, while feed use was lowered by 15 mb, putting the old-crop carry-in stocks 10 mb lower. For the 2024-25 season, USDA raised corn exports by 75 mb to 2.3 bb. Ending stocks for 2024-25 were lowered by 24 mb to 2.073 bb, which was about 19 mb lower than what traders had expected. The season average farm price for corn was lowered a dime to $4.20 per bushel.
On the world front, there were only a few substantive changes. Russian corn production was lowered 900,000 metric tons (mt) to 14.1 million metric tons (mmt) (555 mb); Ukraine production fell 500,000 mt to 27.2 mmt (1.07 bb); and EU production was dropped 3.5 mmt to 60.5 mmt (2.38 bb). Argentine old-crop corn production was lowered to 50 mmt (1.97 bb). World ending corn stocks slipped to 310.2 mmt (12.2 bb) and were down 1.4 mmt from July.
Prior to the report release, December corn had fallen to another new contract low, but by the close was able to finish up 6 1/2 cents and more than 11 cents above the daily low, to close at $4.01 1/2. It is likely much of the bearish news for corn has already been factored into the market. Traders feel that we could still see additional cuts to both Ukraine and Argentine corn.
SOYBEANS
The shock and awe in this month's WASDE report came on the soybean side. First, USDA, using the survey and FSA data, came up with a 1-million-acre gain in harvested acres, to 86.3 million acres. It seems apparent that there was a lot more switching from corn to soybeans during the spring as massive flooding delayed fieldwork in parts of the Northern Plains and Upper Midwest. In addition to that, USDA pegged soybean yield at a higher-than-expected and record-large 53.2 bpa. That was 0.7 bpa higher than what traders surveyed by Dow Jones before the report had predicted, leading to a record-large soy crop of 4.589 bb -- up 10% from last year and 154 mb higher than the July estimate. That sent U.S. ending stocks to a burdensome 560 mb, which was 88 mb higher than the average trade guess.
The combination of bearish factors sent soybean futures reeling after they had already fallen to a new low prior to the report being released. The average farm price for soybeans was lowered by 30 cents per bushel, while the average price for soymeal was lowered $10, but bean oil was left unchanged.
On the global side, world soybean production rose by 6.9 mmt to 428.7 mmt (15.7 bb), with the U.S. rising 4.2 mmt (154 mb) from July. There was increased production in Ukraine, Russia and India as well. World ending stocks rose by a greater-than-expected 6.5 mmt from July to a record-large 134.3 mmt (4.93 bb). Overall, the world oilseed production rose by 4.5 mmt to 690.5 mmt as higher soybean and rapeseed production more than offset the decline in sunflower oil production.
Prior to the report, November beans were already trading 8 cents lower and had set a new low. By the close, that loss had extended to 16 1/2 cents. If there was a light at the end of the tunnel, it would be that November finished a dime above the new low established Monday.
WHEAT
Traders surveyed by Dow Jones ahead of the report predicted all-wheat production to rise modestly to 2.016 bb, but that number instead fell to 1.982 bb. That was a decline of 26 mb from the July estimate with much of the credit given to spring wheat. Harvested acres fell by a greater-than-expected 900,000 acres to 37.9 million acres from and estimated 38.8 million in July. All-wheat yield was increased by 0.4 bpa to 52.2 bpa. While the spring wheat yield fell by 0.5 bpa to 52.6 bpa (which would still be record high if achieved), winter wheat yield rose by 1.2 bpa to 53.2 bpa. As a result of the decline in production, ending stocks in the U.S. fell to 828 mb from 856 mb in July, which was 32 mb less than what traders had expected.
On the global front, there were some minor revisions. Ukraine production was increased by 2.1 mmt to 21.6 mmt (793 mb), while EU wheat production was lowered 2 million metric tons to 128 mmt (4.7 bb). Australia's wheat production rose by 1 mmt to 30 mmt (1.1 bb). Kazakhstan had an increase in production by 1.5 mmt to 16 mmt (588 mb). EU imports were increased by 1 mmt to 11 mmt (404 mb). EU feed use of wheat was increased by 1.5 mmt, and Ukraine's rose by 500,000 mt. Australia's wheat exports were increased by 1 mmt to 23 mmt (845 mb), and the EU exports fell by 500,000 mt to 34 mmt (1.25 bb). The net effect of all of the world changes was that world wheat ending stocks fell to 256.6 mmt (9.4 bb) -- just slightly lower than trade expectations and the lowest since 2015-16.
Kansas City wheat prices were trading down 6 cents prior to the report, and at the end of the day, also finished 5 3/4 cents lower, while Chicago was down and Minneapolis ended a few cents firmer.
Dana Mantini can be reached at dana.mantini@dtn.com
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