Posted on August, 9, 2024 at 09:50 am
Grain prices seem to be holding steady heading into the Aug. 12 USDA WASDE report. Trade is bracing for a large yield number from USDA. But might there be surprises in this report?
Looking back at history, the August WASDE report in some years was a catalyst for an early harvest-price low. However, in other years, the gleaned information projected hefty supplies, which sent grain prices even lower.
Here are four watchlist items to monitor for Monday.
Change to supply. With this report, USDA has the potential to change both harvested acres for corn and soybeans. It can also update yield expectations. With the wet spring endured in many portions of the Midwest, some acres drowned and some farmers opted to take prevent plant. Monday’s report will consider an update to planted acres as USDA based on Farm Service Agency and Risk Management Agency data information. To my knowledge, this is the first time this information will be incorporated this early, as last year they disclosed that information in the September WASDE report.
Demand forecast. On the demand side, traders will monitor export and crush demand for soybeans and ethanol and export demand for corn. The USDA recently increased some of those demand numbers, so traders will want to see whether USDA holds those numbers as still achievable for the 2024-25 crop year.
Ending stocks. Remember, traders trade on perception – and we will be watching for any suggestion that ending stocks are getting larger (which would weigh on prices) or getting smaller (which could offer support to grain prices).
Global supplies. For soybeans, my eyes will look to see if production in Brazil is lowered. Current USDA projection from the July report suggests that 2023-24 Brazil soybean is at 153.00 MMT, but many in the industry think it may be lower than that. However, that may not matter as traders instead focus on the 2024-25 crop potential in Brazil, pegged at a whopping 169 MMT on the July WASDE report.
For soybeans, the current U.S. ending stocks for the 2024-25 crop year are pegged at 435 million bushels, which is a comfortable supply number. This is up from 345 million bushels for the 2023-24 crop year, and also up from 264 million bushels from the 2022-23 crop year.
For corn, the current U.S. ending stocks for the 2024-25 crop year are pegged at 2.097 billion bushels. Up from 1.877 billion bushels from the 2023-24 crop year, and 1.36 billion bushels in the 2022-23 crop year. Remember, the perception of large supplies tends to weigh on prices.