July 20, 2017

July 2017 USDA Supply & Demand Report

July 12th, 2017


US Ending Stocks (16/17 in million bushels)
USDA June 17 Avg Estimate USDA July 17
Corn 2,295 2,303 2,370
Soybeans 450 428 410
US Ending Stocks (17/18 in million bushels)
Corn 2,110 2,113 2,325
Soybeans 495 490 460
Wheat 924 867 938

Video Analysis:

Each month USDA updates various estimates of supply and demand and revises its moving target for where stocks will end at the end of the marketing year, August 31 for corn and soybeans and May 31 for wheat. The July report hold both old and new crop numbers. USDA’s specific methodology keeps it from showing real world numbers on this report. Old crop is typically adjusted to the findings of the June 30th Grain Stocks report, which reported stocks as of June 1. New crop numbers are slightly changed as well. They incorporate the old crop adjustments in the form of beginning stocks. New acreage estimates from the June 30 Acreage report are also included. Since 2013 they are using a weather/yield model for the May through July reports. That model for corn only looks at the mid-May planting pace and whole-month July temperatures and precipitation.

Corn: Old crop ending stocks were increased from 2.295 billion bushels up to 2.370. That was over the 2.321 billion trade estimate but right on Allendale’s 2.370. Feed/residual was lowered by 75 million due to the June 30 Grain Stocks report. New crop stocks were raised from 2.110 billion to 2.325. That was over the 2.181 trade estimate but near Allendale’s 2.348. Beginning stocks were obviously raised. Planted acreage was increased reflecting the June 30 Acreage. Other changes included a 50 million bushel increase for feed/residual. Allendale currently expects a 1.5 million acre decline in plantings to be posted on the October supply/demand report. Based on the current weather forecast, if it holds, we expect a 166.0 yield. Expect to see new crop stocks down to 1.8 billion in a few months. This report will be viewed a bearish by the trade as the numbers were over the average analyst guess. It should not have been a surprise at all but much of the industry simply does not understand USDA’s approach on this report.

World Numbers: Old crop ending stocks were raised from 224.6 million tonnes to 227.5. This came from the higher US numbers. Additionally, Argentina’s spring/summer 2017 crop was raised by 1 mt to now 41. Brazil was left unchanged. New crop corn stocks were raised from 194.3 to 200.8 mt today. This was mostly a US issue as well.

Price Expectations: USDA’s old crop corn price forecast...

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