Aug 12 / Ignacio Espinola

Post-WASDE Monthly Report - 2024 08 12

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"Comments about the results of USDA's report"

Soybeans: Bearish

Figure 1: US Soybeans - Ending Stock (M bu)

This month the USDA brought some interesting updates regarding the US numbers.

The USDA has raised it’s 24/25 Soybean crop number into a record 4.589 Bbu, exceeding analysts' expectations and last month's forecast. Same situation happened with the Ending Stocks number, which came out at 560 Mbu, way higher than the expected 465 Mbu and previous month number. Finally, yield per acre came at 53.2 bu/acre, 1.2 bu/acre above previous report (52 bu/acre).

August is the most important month for soybean crop development, and traders will closely monitor weather in the U.S. Midwest, which is so far expected to be largely beneficial.
On the South American side, there’s not so many things worth to mention. Regarding 23/24 crop, Argentina’s figure got reduced once more by 0.5 M mt, leaving a final number at 49 M mt which we agree, and Brazil’s production number remained unchanged, at 153 M mt.




Corn: Neutral-Bullish

Figure 2: US Corn - Ending Stock (M bu)

On the US side, there was an increase on the corn yield up to 183.1 bu/acre (4.65 Mt/ha) followed by a reduction on the planted area which did not affect much the ending stocks and the total production number. Still, a production number of 15.147 M bu represents the third biggest corn crop in US History.

On South America, and as said on our Pre-WASDE report, we were expecting some adjustment in Argentina production. The report reduced the Argie number on 2 M mt, leaving a total production at 50 M, we still think there is downsize until 46.5 M mt which, in our opinion, is the most realistic number. It seems like the USDA is taking some time and will be adjusting the final number slowly in the next reports as it has been cutting between 2-1 M mt on every report.

On Brazil side, the report came out unchanged. Let’s remember that CONAB’s number was closer to 116 M mt and our own number remains at 119 M mt for 23/24 Brazil corn production.

To summarize, we should see a neutral to slightly bullish market considering the adjustments seen on this report. The funds are still record short and it does seem like the market has much play on the corn side.

Wheat: Neutral

Figure 3: US Wheat - Production (M bu)

As expected, the USDA did not bring too much news for wheat. On the US side, there’s a reduction in the Ending Stocks of 28 M bu, leaving a final number at 828 M bu (22.5 M Mt). On the production side, there was also an adjustment leaving the US production at 1.982 M bu versus previous 2.008 M bu (53.9 Mt/Ha).

The concern on Europe’s production and especially French ones (potentially, the worst crop in 41 years) is what the market is looking at. Also, the good news on last GASC tender in which the Egyptian government released its biggest tender in history for 3.8 M mt on deferred positions (October 2024 to April 2025) might bring some ideas about the forward curve on prices.

To conclude, this was a neutral to slightly bullish report for wheat as we wait for confirmation on Europe’s crop estimations.


WASDE Commentary — Grains

Written by Ignacio Espinola
ignacio.espinola@hedgepointglobal.com
Written by Thais Italiani
thais.italiani@hedgepointglobal.com
www.hedgepointglobal.com

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