The US balance will continue to be the highlight of the WASDE report until we see a definition on production estimates which is expected to come by Sept/Oct report.
Every August brings a change in USDA’s yield methodology. Until August the USDA uses statistical models to predict the yields while in August they change and start using numbers that come from crop tour, closer to the reality.
That being said, we are expecting a small increase on the US Yield of +0.5 bu/ac leaving the final number at 52.5 bu/ac. Weather and conditions have not affected the production so far so there is no sign of any reduction in this matter but there is still time for news on this, so we have to keep an eye on for the next report in September and news about the weather.
For Argentina, we don’t see any reason to correct the 49.5 M mt production number and for Brazil the market range is between 149-153 and the WASDE number is 153 M mt so we could see a slight adjustment here.
Like on Soybeans, the change on methodology could bring some impacts into the corn balance. Market expectations of 182 bu/ac are close to a little bit bigger than the actual yield number of 181 bu/ac, but we could have some surprise due to the change of methodology.
The difference between soybeans and corn is that during August, the corn numbers tend to be more definitive as the key development stages have already passed.
For the South American side, we don’t expect any adjustment on Argentina’s Corn production yet, maintaining a 51-52 M mt as the previous WASDE report and for Brazil, the market is also not expecting any change, remaining the Corn production at 122 M mt.
Finally, WASDE actual 311.6 M mt on the world ending stock number might be on the low side comparing to the market expectations who are in a range between 310-334 M mt. If there’s any adjustment on SAM or US production this could clearly affect the ending stocks number.
For wheat, August WASDE usually do not bring any big news regarding US numbers. The market estimates for US production, US ending stocks and World ending stocks seem to be similar to the WASDE numbers when we look at the average of those 3 ranges.
There has been some concerning news regarding Europe’s new crop, especially for France who’s expecting its lower production number in the last 40 years. If the WASDE reflects this numbers, we could see a potential rally for wheat in the upcoming days.
