CORN:
The USDA report showed US corn production for 2023/24 at 15.320 billion bushels versus an average expectation of 15.201 billion and a range of expectations from 14.675 to 15.530 billion. This was up from 15.265 million in the June report. Yield came in at 177.5 bushels/acre versus 176.3 expected (range 170-180) and down from 181.5 in June. Ending stocks came in at 2.262 billion bushels versus 2.249 billion expected (range 1.951-2.652 billion) and 2.257 billion in June. Ending Stocks for 2022/23 came in at 1.402 billion bushels versus 1.424 billion expected and 1.452 in June. World 2023/24 ending stocks came in at 314.12 million tonnes versus 314.9 million expected (range 310-322 million) and 313.98 million in June. Brazilian 2022/23 production came in at 133 million tonnes versus 133 million expected (range 132-135 million) and up from 132 million in June. Argentine production came in at 34 million tonnes versus 34.2 million expected (range 32-35 million) and down from 35 million in June.

PRICE OUTLOOK:
The USDA report was almost as bearish for corn as it was for soybeans, and in the wake of the report the trade decided to extract even more weather premium from prices with a downside breakout. Not all the corn readings were bearish, but crop production exceeded average expectations. The yield estimate came near the upper end of the range of expectations but below the reading from June, resulting in a 5 million-bushel increase in ending stocks. With the waves of precipitation since the June USDA report, traders could be anticipating a higher yield than what was reported today. The prospect of tightening of US corn stocks is lost, at least for the time being, especially if Monday's US crop conditions report shows further improvement. The market is significantly oversold from a 3-week slide of $1.48. On the other hand, with managed money in the most recent Commitments of Traders report showing a net short of only 18,000 contracts versus 118,146 in May, more selling is possible, and December could spike down to $4.76.

The World Agricultural Supply and Demand Estimates (WASDE) report is prepared monthly and includes forecasts for U.S. and world wheat, rice, and coarse grains (corn, barley, sorghum, and oats), oilseeds (soybeans, rapeseed, palm), and cotton. U.S. coverage is extended to sugar, meat, poultry, eggs, and milk. USDA World Agricultural Outlook Board analysts chair the Interagency Commodity Estimates Committees (ICECs) comprising representatives from several key USDA agencies. The nine ICECs- one for each commodity- compile and interpret information from USDA and other domestic and foreign official sources to produce the report.

The ICECs rely on Foreign Agricultural Service (FAS) attaché reports and analysis of foreign commodity developments, Economic Research Service (ERS) domestic and foreign regional assessments, and National Agricultural Statistics Service (NASS) U.S. crop and livestock estimates. For domestic policy and market information, the Board relies on the Farm Services Agency and the Agricultural Marketing Service. WAOB and FAS use weather analysis and satellite imagery to monitor crop conditions. Additional private and public information sources are considered.

This broad information base is reviewed and analyzed by ICEC members who bring diverse expertise and perspectives to the report. To arrive at consensus forecasts, alternative assessments of domestic and foreign supply and use are vetted at the ICEC meetings. Throughout the growing season and afterwards, estimates are compared with new information on production and utilization, and historical revisions are made as necessary.

The WASDE reports a full balance sheet for each commodity. Separate estimates are made for components of supply (beginning stocks, imports, and production) and demand (domestic use, exports, and ending stocks). Domestic use is subdivided into major categories, for example corn for feed and corn for ethanol. Domestic use may be based on data from other Federal agencies: for example, U.S. wheat ground for flour, soybeans crushed for oil, and cotton mill use come from the Bureau of the Census. The demand side of the balance sheet may include a category for “residual” or “unaccounted” disappearance to balance known uses against total supplies.

The WASDE also reports forecast season-average farm prices for most items. Prices tie together both sides of the balance sheet. Market prices aid in rationing available supplies among competing uses. Prices also indicate potential supply responses, for example potential planting decisions for the upcoming year. The process of forecasting price and balance sheet items is complex and involves the interaction of expert judgment, commodity models, and in-depth research by USDA analysts on key domestic and international issues.

These reports present US and world supply/demand outlooks for a wide variety of agricultural products, including grains, oilseeds, cotton, pork and beef. They represent an accumulation of data on production and usage and offer projections for current/upcoming the marketing year.

The reports are released monthly, but the estimates are not necessarily revised every month. For the US data, production numbers tend to be revised during the growing season and into harvest, while demand numbers tend to be adjusted once the harvest is in and the products are marketed. The world data is adjusted every month because the data comes from many countries around the world.

Analysts focus primarily on each year’s ending stocks, as that provides a picture of whether supplies will be “tight” or “ample” at the end of the year. However, as production and consumption have been on a long term growth path for several decades, stock levels that may have been considered “ample” in years past may not be so anymore. With that in mind, analysts often prefer to use the stocks/usage ratio as a way of taking into account long term growth trends.

The world data covers individual countries as well as the entire world. Special attention is paid to the key producers, exporters and consumers. Brazil and the US together represent about 70% of global production and 85% of exports. The US, Argentina and Brazil represent 70% of global corn exports. Wheat is grown all around the world, with the US, Argentina, Australia, Canada, EU, Russia and Ukraine all major producers. India is the world’s largest producer of cotton, but the US is by far the largest exporter.

Traders will also want to keep in mind that marketing years vary from crop to crop, coinciding with the harvest. For example, wheat’s marketing year runs from June through May, cotton’s from August through July, corn and soybeans from September through August, and soybean meal and soybean oil from October through September (one month after soybeans).

The WASDE report also covers US meat production and consumption, including beef, pork and poultry. Annual production, consumption, export and stocks data is presented in the report, similar to the field crops. But this report also presents quarterly production data, which is of interest to cattle and hog traders, who track quarterly changes and compare them to previous years to gain insight as to whether the supply setup in upcoming quarters.