July Supply-Demand Summary

Corn: At first glance, the USDA’s numbers weren’t all that different than the trade. The USDA’s corn production estimate of 15.0 billion was just 41 less than the trade average and the former’s ending stocks forecast of 2.65 billion fell 83 million shy of the trade average. It would appear an otherwise neutral report has taken a back seat to the weather forecast with the mid-day 7-day outlook suggesting some very timely rain for especially the drier areas of the Midwest. The USDA does expect a 10 MMT draw-down in Chinese corn stocks in the coming year and while there were no changes in both its old and new crop imports (7 MMT each), there may be some optimism for additional volume based on this morning’s sales announcement. Neutral report; bearish short-term weather picture.

Soybeans: Hopes for an increase in demand for U.S. soybeans in at least the short-term were dashed with the USDA upping this past spring’s Brazilian soybean crop by 2 MMT to 126.0, nearly 3 MMT more than the trade was expecting. Further, the country’s bean export forecast were raised 4 MMT to 89 million, which more than offset a 2 MMT increase in the USDA’s forecast for 19-20 Chinese imports. The latter total is now at 96.0. Interesting the USDA sees Chinese crush in 20-21 rising 6.5 MMT to 95.0 (TY was raised 1 to 88.5 TM) BUT IMPORTS are estimated to be unchanged at 96.0. Also note China’s soybean stocks are seen rising nearly 8 MMT in 19-20. The USDA’s 425 mbu forecast for 20-21 U.S. soybean ending stocks was 30 million more than last month but only 1 higher than the trade average. Weakness in corn and a stable Chinese import demand outlook in 20-21 are contributing to the market’s weakness post-report.

Wheat: Neutral to slightly supportive report, following a reduction in U.S. SRW and HRW production estimates. In contrast, initial survey-based estimate of U.S. Other Spring production was nearly in line with expectations at 550 mbu. U.S. SRW crop was lowered 17 mbu (5.7%), while HRW output was reduced by 33 mbu (4.4%). First estimate of U.S. HRS production is 502 mbu vs. last year’s 522 mbu. USDA indicates smaller competitor crops v. last month in European Union (-1.5 MMT) and Russia (-0.5), but that was offset somewhat by a higher export forecast for Australia (+0.5). Greatest support is evident in Chicago SRW Wheat as the market focuses on U.S. SRW harvest results, while more of a choppy trend appears likely for KC HRW and MGEX HRS with attention on crop prospects in Russia and Canada.