Futures drop following bearish USDA report

Corn treated with a pre-emerge residual/glyphosate tank mix.

Corn, soybean, and wheat futures all dropped on Wednesday following the release of the U.S. Department of Agriculture’s July supply/demand estimates.

The USDA did not reduce its production estimates to the extent analysts were expecting due to dry conditions in the U.S. Midwest and the markets reacted to the downside for August soybeans and the Dec corn contract.

Jon Driedger, with Leftfield Commodity Research, says we’ll see the full impact of this report over the coming days, but right now the new crop soybean carryout number will be viewed as disappointing and definitely bearish.

The average U.S. soybean yield estimate was left unchanged and at the high end of traders’ expectations at 52 bu/ac, with ending stocks projected at 300 million bushels versus the average pre-report guess of just under 200 million.

The average corn yield estimate was reduced by four bushels per acre from the June report, to 177.5 — almost a bushel higher than the average trade guess. Corn ending stocks were slightly higher than market expectations at 2.262 billion.

“I think everyone knew the 181 number they were using before was unrealistic, given conditions,” Driedger says, saying this new number is likely “reasonable” at this stage in the growing season.

Watch/listen to a full WASDE analysis with Jon Driedger, Leftfield Commodity Research, below:

As for wheat, U.S. ending stocks were adjusted 30 million bushels higher from the June estimate to 592 million versus pre-report trade guess of around 570 million.

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