On Tuesday, June 12, we got the USDA’s WASDE report for the month.
The biggest changes were seen in the ending stocks, especially for corn. Also, a bit surprising? The situation in South America where the crop continues to be downgraded. Since the USDA rarely touches corn production numbers in the June WASDE report, it’s estimated that American farmers will still produce a 14.04 Billion-bushel crop. This would be four per cent higher year-over-year.
The USDA also doesn’t touch the US soybean yield number, so again, US production was left alone at 4.28 billion bushels. However, the agency reported higher crush numbers and a significant reduction in 2018/19 US soybean ending stocks, when the market was expecting a slight increase.
For the usual WASDE report, the world canola balance sheet doesn’t garner a whole bunch of attention. And the June WASDE didn’t really change that rhetoric, however, there are ideas that some spillover from soybeans is helping world canola prices find a bottom.
For winter wheat, the USDA followed the lead of other private firms in lowering the size of the Russian 2018/19 wheat crop by 3.5 million tonnes to 68.5 million tonnes. They also dropped exports by 1.5 million to 35 million tonnes for the new crop year. In both the US and global, wheat ending stocks were raised slightly for 2017/18, but lowered for 2018/19.
While we won’t get an update on the US spring wheat crop until next month, we do know that total 2018/19 US wheat production was pegged at 1.827 Billion bushels in this report. This was about five million bushels more than what the market was expecting. Also, US hard red spring wheat 2017/18 ending stocks were raised by five million bushels to 200 million. Finally, we saw ending stocks raised in both Canada and Australia.
For oats, US 2017/18 imports were raised by 3 million bushels to 90 million tonnes. With all other values unchanged, this pushed 2017/18 AND 2018/19 US oats ending stocks higher by three million bushels each to 24 and 29 million bushels, respectively. Global 2018/19 oats carryout is also forecasted to come in around six per cent higher year-over-year, at 2.6 million tonnes.
In barley, nothing was changed for the US crop but the global barley balance sheet had some notable changes. Both 2017/18 and 2018/19 global barley carryout were raised to 18.55 and 17.73 million tonnes respectively. This, despite world barley production in 2018/19 being lowered by 610,000 tonnes month-over-month to about 147 million tonnes in this June WASDE report.
Overall, this report gives us some guidelines as to where the global balance sheet is looking especially for wheat. For crops like corn, soybeans, and canola, there’s still a few questions up in the air in terms of production potential, in addition to demand. Especially notable is US corn as, as it stands, a 185 bushel-per-acre yield would be needed to maintain the current 2017/18 stocks. But the USDA is using a 174 bushel-per-acre number and so it’s more than likely that we’ll see US corn ending stocks fall below 1.7 billion bushels for the first time in 5 years.
Brennan Turner is the President & CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Turner was named to Fast Company’s List of Most Creative People in Business. He is originally from Foam Lake, Sask. where his family started farming land nearly 100 years ago (and still do to this day).