Coming off the questionable USDA Acreage Report in late June, the market is faced with the dilemma of how seriously to take the July World Agricultural Supply and Demand Estimates (WASDE), knowing that a second planting survey is due out in August and could significantly alter Thursday's new estimates.
On Thursday, July 11, USDA is going to provide its best supply and demand estimates for U.S. corn, soybeans, wheat and various other ag commodities; that is the official line. In the real world, USDA is likely to provide crop estimates of corn and soybeans, using flawed planting estimates from the June 28 Acreage Report.
By "flawed," I am not suggesting malfeasance on USDA's part. It is just that we know from the June 28 report that some large share of 15.8 million acres of unplanted corn at the time of the survey was assumed to have gotten planted -- a bold assertion, given the wet June conditions that prevailed, especially in the eastern Midwest.
So, we come to July 11 and what else can the World Agricultural Outlook Board (WAOB) do but use the National Agricultural Statistics Service (NASS) planting estimates from June 28? This happens to be the final WASDE report overseen by Dr. Seth D. Meyer, chairman of the WAOB for the past five years.
As USDA Chief Economist Robert Johansson said in a June 19 news release, "Seth has been a real asset to USDA, OCE, and the WAOB. The board in particular has benefited tremendously from his knowledge and leadership."
WHEAT
For wheat, USDA's National Agricultural Statistics Service (NASS) will provide new production estimates for U.S. wheat categories, including spring wheat. According to Dow Jones' survey, U.S. wheat production is only expected to increase from 1.903 bb in June to 1.905 bb in July, so we are only talking about small tweaks to each wheat category. The survey estimates HRW wheat production at 804 mb, up from 794 mb in June.
On the world stage, Dow Jones' survey expects world wheat ending stocks to drop from an estimate of 294.3 mmt in June to 290.8 mmt (10.68 bb) in July. There has been talk of a possible reduction to Russia's wheat crop estimate, but weather threats have been limited. I suspect Dow Jones' analysts are underestimating the size of this year's world wheat crop.
As you can see above, 2019 continues to be an atypical year for grain markets, with more questions on the table than USDA or any of us have answers for at the moment. Except for new wheat production estimates from NASS, we aren't likely to find any better answers in Thursday's report and it is difficult to know if the market will even trade Thursday's numbers.
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