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Above Video: New crop December corn futures posted their lowest closing price since October of 2021 following a USDA report which showed a bigger than expected US Corn Yield.  Soybeans were arguably more bearish with a much larger new crop carryout versus expectations.  November beans are so far holding ground above the Monday lows. 

US Crop Production Snapshot

Report Recap

Today’s WASDE report bucked the USDA’s historical trend of leaving new-crop estimates unchanged. Dryness across the corn belt through the month of June, and the eye-opening Planted Acreage report from June 30th laid the groundwork for the USDA to materially change new-crop corn yield estimates, and soybean ending stocks estimates, for the first time since 2012-13. 

In today’s report, USDA lowered new-crop corn yield estimates to 177.5 bushels per acre (BPA) - a 4 BPA reduction from last month’s 181 BPA. While the 181 initial estimate was optimistic to begin with, it’s uncommon for the USDA to make such a significant change this early in the crop year. Poor crop conditions, namely in Iowa and Illinois, stemming from dryness through mid-May through June were the catalyst for the first new-crop corn yield estimate reduction in the July WASDE report in 2012. Despite the yield decreases, domestic new-crop corn production is pegged 55 million bushels higher based on the higher-than-expected acreage reported in June 30th’s Planted Acreage Report (94.096 mil acres). New-crop supply increases were partially offset by a decrease of 50 mil bu. in beginning stocks as a result of greater feed and residual demand usage. The net result was an additional 5 million bushels in ending stocks. Interestingly, USDA opted to leave domestic export projections unchanged despite being down more than 30% year over year. Lastly, The implied stocks-to-use ratio of 15.6% is the highest of any period in the last 7 years. 

The biggest surprise in the July WASDE report came from the dramatically higher-than-anticipated soybean ending stocks. New-crop soybean stocks were reported at an estimated 300 mil bu. For comparison, the average trade estimate was a mere 199 mil bu. The inspiration for the lower expected soybean carryout likely stemmed from the significantly lower-than-anticipated soybean acreage reported in June 30th’s Planted Acreage report (83.505 mil acres), and the dryness in the month of June. Unlike corn, new-crop soybean yield estimates were left unchanged at 52 BPA. Total soybean production was pegged at 4.3 billion bushels (210 mil bu. fewer than last year), hence the lower stocks estimates on behalf of the trade. However, a 125 mil bu reduction in exports, and a 10 million bushel reduction to soybean crush as a result of lower domestic soybean meal disappearance sufficiently offset lower production. The net-change was just a 50 million bushel reduction in ending stocks in spite of the 210 mil acre shortfall in production.

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