MINNEAPOLIS — A bearish picture was painted by the U.S.
Department of Agriculture in its crop production and world agricultural
supply-demand reports issued July 11.
“The biggest surprise in today’s report was probably that
there was no surprise in today’s report,” Jonah Ford, Ceres Hedge market
analyst, said in a teleconference hosted by Minneapolis Grain Exchange.
The reports had minimal impact on the market following the
initial releases as traders turn their attention back to the weather.
“I think the trade had gotten pretty exhausted from USDA
reports coming out and knocking the market one way or another, and we did not
see that today. For the first time in a while, there were no exaggerated moves,”
He pointed out some of the reports’ highlights and their
impacts or lack thereof. Hard red winter wheat production was increased 11
million bushels, and soft red winter wheat saw a 30 million increase.
“That was somewhat bearish, but the total wheat use was
raised 89 million bushels. Lower expected domestic use more than offset by
projected exports,” the analyst said. “The wheat got a (market) bounce from the
strong export numbers.”
Global wheat supplies were lowered 3.5 million tons,
reflecting lower-than-expected beginning stocks as world production rises.
“The report has not had that much affect on the market as it
reflects no substantial change in the underlying numbers,” Ford said.
The USDA increased corn planted acres from 97.3 million
acres projected in June to 97.4 million acres in the latest report. However,
harvested acres projections were reduced from 89.5 million acres last month to
89.1 million acres this month.
“They actually shaved about one-half million acres from the
harvested number even though they raised planted corn acres. That takes 55
million bushels out of corn,” Ford said. “It still puts us at a very close
margin of 14 million bushels for the crop, which is perceived as bearish.
“So the one question hanging over that market is: Do we
really have 89 million acres? And what’s our final yield going to be?
“There wasn’t also a lot of insight as far as this goes
other than the USDA staying around the 97 million acres, and there was some
indication they might cut back.
“They did cut harvested, but only by 55 million bushels
total, not enough to start shaving off those ending stocks for next
There were no significant changes in the global corn balance
sheet outlook. As with corn, soybeans also were somewhat bearish in the
The USDA increased soybean planted acres by 600,000 to 77.7
million acres and raised harvested acres by 700,000 to 76.9 million acres.
“Expectations for the bean harvest are little bit stronger
than corn,” Ford said. “Global production was increased 2 million bushels from
last month, another slightly bearish indication.”
He said the market is “going to start trading the weather
“I think we’re more focused on how this is going to play
itself out going into the fall and the late planting scenario,” he said. “There
were no big surprises one way or the other.”
Regarding the current corn and soybean yield projections of
156.5 and 44.5 bushels per acre, respectively, Ford said, “I think the best case
for bullish sentiment is that the yields may be high.”
“We may come in with a lower overall yield. The corn at
156.5 was a bit ambitious given the late planting and a lot of acres that
potentially will wind up not being planted,” he said.
“And if we get into a weather situation at this point where
because we got such a late start during the planting season in a lot of the key
growing areas, it would not surprise me at all if we are overstating yields for
both corn and soybeans.
“I think soybeans are more vulnerable to weather surprises
come fall because they got in so late and so wet in so many areas that we could
see several bushels per acres shaved off by the end if the weather doesn’t