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How well did WASDE meet expectations?

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Afternoon report: USDA’s new supply and demand data failed to significantly shock grain prices

Grain prices were mixed but mostly lower after USDA reported a few unexpected numbers in its latest World Agricultural Supply and Demand Estimates report earlier today. (Click here for our exclusive recap and analysis of the report’s key findings.) Corn prices firmed moderately today, while wheat prices trended moderately lower. Soybean prices were mixed.

Rains will be scattered and variable across the Midwest and Plains between Saturday and Tuesday, per the latest 72-hour cumulative precipitation map from NOAA. A few areas could gather 1” or more during this time. NOAA’s new 8-to-14-day outlook predicts drier-than-normal conditions for the Northern Plains and upper Midwest between August 18 and August 24, with widespread seasonally cool weather across much of the central U.S.

On Wall St., the Dow improved 316 points in afternoon trading to 33,652 and is on track for weekly gains of around 2%, as investors saw indications that inflation is cooling, thanks in part to falling gas prices. Energy futures were mixed but mostly lower. Crude oil eroded 2.5% lower to $92 per barrel. Gasoline was also down 0.75%, while diesel firmed 0.75% higher. The U.S. Dollar firmed moderately.

On Thursday, commodity funds were net buyers of all major grain contracts, including corn (+4,500), soybeans (+8,500), soymeal (+4,000), soyoil (+2,500) and CBOT wheat (+3,500).

Corn

Corn prices firmed more than 1% higher on a round of technical buying after USDA released lower-than-expected yield and production estimates in this morning’s WASDE report. September futures added 7.25 cents to $6.3650, with December futures up 11.75 cents to $6.3950.

Corn basis bids were steady to weak across the central U.S. on Thursday after sliding 2 to 15 cents lower at seven Midwestern locations today.

USDA offered a first survey-based look at its 2022 corn yield forecasts in today’s WASDE report, dropping its estimates by 1.6 bushels per acre to 175.4 bpa. That was a bit lower than the average trade guess of 175.9 bpa. Because of the lower per-acre yields, USDA also lowered its corn production forecast by 146 million bushels to 14.4 billion bushels.

On the demand side, USDA lowered its estimates for 2022/23 corn use by 45 million bushels to 14.5 million bushels. The agency also lowered feed and residual use by 25 million bushels. Exports for the 2022/23 marketing year are expected to come in at 2.4 billion bushels (down 25 million bushels for July. With supply falling more than use, ending stocks fell 82 million bushels to 1.4 billion.

French farm office FranceAgriMer showed the country’s corn ratings are continuing their steep decline amid widespread hot, dry conditions. Just 53% of the crop is rated in good-to-excellent condition through August 8, versus 62% the prior week. That puts this year’s crop at its worst condition since 2011. Ratings have tumbled 30 points lower over the past month.

South Korean importers purchased 2.4 million bushels of food-grade corn from optional origins in a deal that closed earlier this week. The grain is for arrival around November 10.

Preliminary volume estimates were for 357,220 contracts, trending well above Thursday’s final count of 248,310.

Soybeans

Soybean prices stumbled immediately following this morning’s WASDE report, but some contracts were able to recover by the close amid some mixed technical maneuvering. August futures tumbled 40.25 cents to $16.6925, while September futures gained 11 cents to $15.3125.

Soybean basis bids fell 15 to 30 cents lower at two interior river terminals and tumbled 45 cents lower at an Indiana processor while holding steady elsewhere across the central U.S. on Friday.

As with corn, USDA presented its first survey-based soybean yield forecast in this month’s WASDE report, pegging average yields at 51.9 bushels per acre. That was a monthly increase of 0.4 bpa. Analysts were expecting to see a 0.4 bpa decrease, in contrast. Production potential moved 26 million bushels higher to 4.53 billion bushels, with USDA explaining that higher yields more than offset lower harvested area.

Soybean supplies for 2022/23 moved 36 million bushels above July estimates, to 4.8 billion bushels. Exports tilted 20 million bushels higher, to 2.16 billion bushels. Ending stocks increased 15 million bushels to 245 million bushels.

China’s agriculture ministry reduced its estimates for the country’s 2021/22 soybean imports by 2.1% to 3.344 billion bushels, citing lower demand amid hog herd losses. If realized, soybean imports will be down 8.8% from a year ago. Brazil and the United States are by far the top two suppliers.

Meantime, China plans to auction off another 18.4 million bushels of its state soybean reserves on August 19. The country has offered a flurry of similarly sized auctions throughout 2022 in an attempt to boost local supplies and soften high prices.

Preliminary volume estimates were for 184,603 contracts, moving moderately above Thursday’s final count of 134,653.

Wheat

Wheat prices were unable to find any positive momentum on Friday, with most contracts closing around 0.75% lower after a round of technical selling today. September Chicago SRW futures dropped 6.25 cents to $8.0450, September Kansas City HRW futures eased 1.75 cents to $8.8750, and September MGEX spring wheat futures fell 6.25 cents to $9.1550.

USDA slightly raised its estimates for all-wheat yield by 0.2 bushels per acre to 47.5 bpa this month. Supplies also saw a modest increase, moving 2 million bushels higher to 1.783 billion bushels. Export estimates for 2022/23 improved 25 million bushels to 825 million after winter wheat prices are seen as more competitive after falling from multiyear highs earlier this spring. (The season-average farm price tumbled $1.25 from a month ago to $9.25 per bushel.)

U.S. ending stocks for 2022/23 fell 29 million bushels to 610 million. That was in contrast with analyst expectations – they were expecting an increase of 11 million bushels instead.

Two more ships carrying wheat and corn set sail from Ukrainian ports earlier today, which brings the total number of cargo ships navigating through the Black Sea up to 14 so far this month. This was the first instance of wheat being shipped, with around 112,000 bushels bound for Turkey. Another vessel contained 2.4 million bushels of corn and is bound for Iran.

If you haven’t ventured onto FarmFutures.com in a while, our Friday feature “7 ag stories you might have missed” is an easy way to quickly catch up on the industry’s top headlines. The latest batch of content includes an update on the Inflation Reduction Act of 2022, a look at farmland value trends and more. Click here to get started.

Preliminary volume estimates were for 98,671 CBOT contracts, tracking moderately lower than Thursday’s final count of 124,531.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel      
22-Sep 640.5 616 639.75 7.25
22-Dec 642.75 616.25 642.25 11.75
Soybeans        
22-Sep 1537.5 1483 1535 11
22-Dec 1464.75 1415.25 1454.25 4
Soymeal                $/ton        
22-Sep 467.9 455.6 464.7 9.2
Soyoil                    cents/lb        
22-Sep 69.8 68.1 69.53 0.3
Wheat                    $/bushel        
22-Sep 811.25 782.25 806 -6.25
22-Dec 825 798 822.5 -5.75
KC Wheat        
22-Sep 893.75 859.75 889.25 -1.75
22-Dec 896.5 864 892.5 -0.5
MPLS Wheat        
22-Sep 922.25 895.25 919.5 -6.25
22-Dec 935 907.5 932 -6.75
Live Cattle             cents/lb        
22-Aug 140.775 140.1 140.3 -0.3
Feeder Cattle         cents/lb        
22-Sep 185.75 183.125 183.25 -1.35
Lean Hogs             cents/lb        
22-Oct 100.875 99.575 100 -1.075
Crude Oil  $/barrel *Energy prices may not represent final settlements
22-Sep 94.81 91.16 91.98 -2.36
Diesel        
22-Aug 3.55 3.4521 3.5195 0.0355
Unleaded Gasoline   $/gallon        
22-Aug 3.0844 3.0044 3.0412 -0.0303
Natural Gas        
22-Oct 8.9 8.51 8.736 -0.127
U.S. Dollar Index        
22-Sep 105.77 104.97 105.515 0.521
Gold                      $/ounce        
22-Sep 1802.5 1786 1800.4 10.7
Copper        
22-Aug 3.6755 3.662 3.6755 -0.035
Fertilizer Swaps     (as of 08/12)  
DAP Tampa-index              887.5 -25
DAP-New Orleans              829.5 -8.27
Urea-New Orleans              620.6 -40.79
Urea-Middle East              762.5 -2.5
Urea-Black Sea              585.0 35
UAN (32%) New Orleans              440.9 1.1

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