Crop Production and WASDE reports out from USDA Wednesday

OMAHA (DTN) -- There are a number of things to look at in the June round of USDA reports, though few will draw serious interest as market watchers wait for the big numbers at the end of the month.
USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Wednesday. (Logo courtesy of USDA)

USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Wednesday.

CORN

In all likelihood, the interest in corn begins and ends with total production. The pre-report average estimate came in at just over 13.9 billion bushels, unchanged for the May "initial" look. However, national average yield is expected to increase slightly to 166 bushels per acre, implying harvested acres could fall to 83.9 million. If so, planted acres could be trimmed by the same 400,000 to 91.3 ma, possibly reflecting the spring problems in the Northern Plains.

If we continue to put together a supply and demand table based on pre-report estimates, we must include a slight increase in beginning stocks (2013-2014 ending stocks) to 1.157 bb, pushing total supplies to 15.122 bb. Given the estimate for ending stocks to increase to 1.746 bb (20 mb over USDA's May estimate), the other 9 mb would need to be made up as a slight decrease in demand. When all is said and done, ending stocks-to-use (again, based solely on pre-report estimates) would increase slightly to 13.1%, a bearish result for the new-crop corn market.

Globally, new-crop ending stocks are expected to increase slightly to 182.1 million metric tons from the May estimate of 181.7 mmt. This would most likely come about as a result of slightly increased new-crop production given the old-crop ending stocks estimate showing an ever-so-slight decrease of 0.1 mmt from May to 168.3 mmt. If realized, these world supply and demand numbers could be viewed as neutral.

SOYBEANS

A similar table can be created with domestic soybean pre-report estimates. Given that demand numbers are expected to see only a minor decrease of 3 mb, let's focus on the supply side. The average pre-report production estimate came in at 3.627 bb, down 8 mb from the May report. Yield expectations were also lowered slightly to 45 bpa (May was 45.2 bpa). This would imply a harvested area of 80.6 ma and plantings of 81.6 ma but up slightly from USDA's May projection of 80.5 ma and 81.5 ma respectively. Beginning stocks are expected to be lowered by 3 mb (possibly due to a slight increase in old-crop export demand), dropping total supplies by 11 mb from May. Ending stocks of 322 mb would lower ending stocks-to-use slightly from May's 9.6%, coming in at a still large 9.3%. If realized, the reaction to such numbers could be viewed as neutral to only moderately bullish.

As for world ending stocks numbers, pre-report estimates showed a slight 0.3 mmt increase in new crop to 82.2 mmt. With old-crop ending stocks expected to fall slightly (0.2 mmt) to 66.8 mmt, it would imply a slightly larger global demand estimate. Global production numbers are expected to see only minor adjustments at this point. World supply and demand numbers, if they come in near pre-report estimates, could also be viewed as neutral to bullish.

WHEAT

Unfortunately, it is hard to draw a logical conclusion from stated pre-report estimates in wheat. Total winter wheat production is expected to decline 11 mb. Included in that is a 12 mb decrease in HRW, a 5 mb increase in SRW, and winter white wheat production left unchanged at 209 mb. If you do the math, things don't quite add up, but again it's wheat, so few will take the time to notice. Total wheat production is expected to decrease by 4 mb, implying smaller-than-earlier-expected spring wheat production. If these numbers are close to what USDA releases, it would be hard to argue for anything but a neutral reaction.

Global new-crop wheat ending stocks are expected to decrease slightly from the May estimate of 187.4 mmt to 187.2 mmt. Again, this should come about as a result of lower total production in the U.S. New-crop ending stocks-to-use should still be comfortable near the 26.9% level. Old-crop ending stocks are expected to be nearly unchanged from May's 186.5 mmt. This could result in a neutral to bearish view of global fundamentals.

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