If you would like to receive our technical comments including price projections and cycle analysis for important tops and bottoms, click on the link at the bottom of the commentary to sign up for a 30-day free trial subscription. Follow Ag Watch Market Advisors on Facebook and Twitter for timely information not posted in our blog.
July heat took a greater toll than expected. In the August Crop Report, the USDA lowered their yield estimate for corn to 174.6 bpa compared to the trade guess of 177.1 bpa and 179.5 bpa in July. It will probably be lowered again in the September report because of continued hot conditions this month. Many producers in the eastern Corn Belt inform me that 10-15 percent of the top end of their yield has been lost. Meanwhile, ending stocks for 2021-22 are forecast to fall 190 MB to 1.242 BB. World stocks are projected to be down 6.6 million tons to 284.6 million. Although the USDA trimmed demand 190 MB, the report is friendly because of tightening stocks and could bring the bulls back to the table.
The August Crop Report shows the USDA trimming their yield estimate for soybeans to 50.0 bpa compared to the trade guess of 50.3 bpa and 50.8 bpa in July. Meanwhile, ending stocks for 2021-22 were left unchanged at 155.0 MB while global stocks grew 1.7 million tons to 96.2 million. On the demand side, the USDA lowered exports 20 MB. One factor that sticks out is that China’s imports are forecast to fall 1.0 million tons even though they have been more active in their purchases the past couple of weeks. The report was mostly neutral for soybeans, but with August the most critical month for crop development, weather will continue to be the hot topic for the next few weeks and may keep prices underpinned a while longer.
While the USDA only lowered their 2021-22 ending stocks of wheat 38 MB to 627 MB, world stocks tumbled 12.6 million tons to 279.1 million. This was below the lowest trade guess. The decline came from a 12.5-million-ton decline in Russia’s production, and a 7.4 million ton drop in Canada. Russia has been a thorn in the side of U.S. exports but may become less of one as their export forecast has been lowered 5.0 million tons. Meanwhile, exports from Canada have been lowered 5.5 million tons, and 1.0 million tons in Europe. The report for wheat is friendly and will likely cause the funds to cover the remainder of their shorts.
Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.