The US Department of Agriculture USDA expects a record soybean harvest in the United States this fall. The corn yield also reaches a record level. This is evident from the August edition of the Wasde report. The story is slightly different for wheat. Especially the soybean price took a significant hit. Corn, on the other hand, held its ground.
At 6 o'clock Dutch time, the USDA published its monthly report on grains and oilseeds. Prior to the report, as usual, there was much speculation by analysts and traders. The correction of the acreage figures was expected. The record yields for soybeans and corn came as a surprise to many.
Higher soybean stocks
What stands out is the expected soybean harvest in the US. It is set at 4.589 billion bushels, which is even higher than what the market expected. The acreage was revised upward by 1 million acres (405,000 hectares), and the yield per acre was also positively adjusted. This results in increasing ending stocks to the highest level in six years. The soybean market is already facing difficulties as China reduces its product intake. A strong dollar exchange rate is also affecting exports.
The USDA left its own processing unchanged. The export volume is estimated slightly higher. Globally, the Americans also anticipate a larger soybean stock of 134.3 million tons. That is 3.8 million tons more than previously thought. The soybean harvest in Brazil remained unchanged, while Argentina's was revised downward by half a million tons.
The soybean futures market reacted strongly to the news. The November contract (new harvest) closed at $9.86 per bushel, falling below the psychological threshold of $10. The contract dropped by $1.6 ½. A similar decline was visible for the September contract. On one hand, this is quite remarkable. The crude oil market actually rose yesterday, which normally supports soybeans.
Less corn planted
For corn, the story is not much different. Here, the USDA did lower the planted acreage by 323,755 hectares (800,000 acres). The harvestable acreage was also revised downward to 82.7 million acres. At the same time, the yield per acre was adjusted upward to 183.1 bushels per acre, a record level. The total corn production does not reach a record value yet, but it amounts to a significant 15.147 billion bushels, an increase of 47 million bushels from the July forecast.
The ending corn stocks are expected to decrease. This is mainly due to increased exports, while usage for ethanol and food production declines. Globally, the USDA reduced corn production by nearly 5 million tons to 1.219 billion tons. The ending stocks slightly decrease. Similar to soybeans, the Brazilian harvest figures remained unchanged, while Argentina's were slightly reduced.
Stable corn price
Traders had roughly anticipated these corn figures. The unexpected record yield was offset by a smaller harvestable acreage. As a result, corn eventually dropped to $3.83 ¼ per bushel for the September contract, a 15-cent decline. The December contract, on the other hand, slightly increased to just above $4 per bushel.
The USDA lowered the wheat production to 1.98 billion bushels. This is a decrease of 26 million from the July forecast. The harvestable acreage was slightly adjusted to 37.9 million acres, a decrease of almost 365,000 hectares from the previous report. With lower wheat production, the ending stocks also decrease by 28 million bushels to 828 million bushels.
Globally, the USDA increased wheat production by 2.09 million tons to 798.28 million tons. The Americans expect 83 million tons of wheat for Russia and 128 million tons for the EU. This is quite conservative, considering that Europe is already discussing 116.5 million tons.
Wheat price declines
In Chicago, wheat also closed in the red. The September contract settled at $5.36 ¾. The Paris exchange had already closed when the report was released. Nevertheless, wheat on the Matif also ended lower at €214.50 per ton, a decrease of €2.50 from Friday's close. Corn was at €202.75, down €1 from Friday.
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