August WASDE Preview

The USDA will update their Supply and Demand worksheets for August on Monday at 11 AM.

CORN

Trade’s bias in this report is for old crop use to expand slightly as prospects for exports rising and ethanol use expand. However, there’s a diversity of opinions as to whether that will expand or contract the carryout with trade thinking that carryout could contract by as much as 50 million bushels (mil bus) or expand by as much as 120 mil bus.

In either case, this remains a sharp expansion from last year’s 1.360 billion bushels (bil bus) with expectations between 1.8 bil bu and 2.0 bil bu.

For new crop, trade’s average expectation is that production is mostly steady, as yield is expected to increase by about a bushel and harvested acres are expected to contract by about a half million acres. This will be the first restatement of yield since the USDA published their trendline estimate late last year, and the first update to acreage, incorporating FSA data, since the USDA published the Acreage report at the end of June. Importantly though, there is a large range of expectations here, with some seeing production falling nearly 200 million bushels, while others expect the opposite. For example, yields are estimated between 180-184 bushels per acre (bu/ac) nationally, and harvested area is estimated between 82.2 and 83.450. So yields could be down 1 to up 3 and acreage can stay where it is or contract more than a million acres.

This wide disparity in production expectations then leaves Ending Stocks with a very wide range of expectations between 1.9 to 2.3 billion bushels, again, up 200 million bu, to down 200 million bu from the USDA’s July publication.

In terms of yield expectations, FBN’s data team is currently expecting yields to fall, and frankly to fall sharply. After initializing our yield model at 181.5 bu/ac, yields dropped for the next two weeks, bottoming last week at 175.3. Yields improved this week by 3/10ths of a bushel to 175.6 bu/ac. However, yields remain more than 4 bushels lower than trade’s lowest expectation, and 1.7 bu below last year’s record result.

It’s important to remember that the reported yield will be an assemblage of survey responses, collated and massaged, to understand the yield. This is not an objective estimate, physically surveyed by USDA employees. Therefore, the yield should be viewed cautiously.

SOYBEANS

Old crop soybean carryout is expected to expand slightly, adding just 5 million bushels from last report’s 345 mil bushels. The range of estimates are mixed though, with some expecting carryout to fall up to 13 mil bushels, while others expect an expansion of up to 20 million bushels.

New Crop, is expected to grow 35 million bushels, with a very wide possibility of outcomes on a percentage basis, with some expecting a contraction of up to 55 million bushels (-12.6%), while others are looking for an expansion of up to 120 million bushels (+27.6%). This is driven by a wide range of yield and area expectations, with some seeing a modest contraction in yield of .5 bu/ac, while others are seeing an expansion of up to 2 bu/ac. In addition, acres will be restated with an average expectation, that acres will contract by about 150 thousand acres. Again, this sees total harvested acres, down 500 thousand acres to up 340 thousand acres, leading to a wide range of carryout outcomes from 380 mil bu - 555 mil bu, ranging from a small increase of 35 million bushels YoY from July’s estimate of the ‘23 carryout, to a sharp expansion of 210 million bushels or a 61% (!) increase. The average expectation is 470 million bu, an increase of 35 million bushels from July’s estimate and a 36% increase from CY23 as reported in July.

FBN’s estimate is in line with the average estimate of 52.6, with our data team’s estimate 2/10ths of a bushel higher at 52.8 bu/ac.

WHEAT

Wheat is not expected to change much, with the carryout growing 5 mil bu, with average estimates nibbling around the edges, with no class of wheat changing more than 5 mil bus from July’s estimates. The range of estimates are also much more narrow.

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