Check analysis of the July 2015 USDA crop production report - WASDE
USDA on Wednesday increased U.S. hard red winter wheat production more than expected to 887 million bushels from May's 853 million to put its total winter wheat at 1.505 billion bushels from May's 1.472 billion.
Those numbers topped average trade forecasts and sent wheat futures sharply lower. The hard red winter has endured drought and late-season rain, but USDA said the rain likely helped the crop.
"USDA's forecast is bearish for wheat because of the bushels involved, but as the government noted, rains have caused problems with disease and lodging," said Bryce Knorr, Farm Futures senior grain analyst. "Quality wheat looks like it will be at a premium. The question is whether the effort to find good bushels will play out just in the cash market, or spill over to futures, too."
One scenario would be bull spreading helping the board "if end users have to go long futures to try and offset their risk in the cash market," he said.
In futures trading, traders looked at the bigger numbers and sold. July soft red winter wheat futures were down about 17 cents in midday trading and Kansas City's July hard red winter was off about 14 cents.
Old-crop ending stocks for corn and wheat were raised while soybeans were lowered. The corn number of t 1.876 billion topped the average trade estimate but was within the range, while the 330 million for soybeans was under the trade average of 341 million.
"As we expected, improved ethanol plant efficiency caused USDA to raise its forecast of corn ending stocks, with the increase even more than we expected at 25 million bushels," said Knorr. "USDA didn't raise its new crop carryout any more than that, even though Brazil has a huge crop that will get our selling season this fall off to a slow start."
Corn futures were about 6 cents a bushel lower near midday following wheat as USDA's corn numbers were not too far from trade views. Soybeans were down about 2 cents in July and down about 4 in November.
"USDA cut its estimate of 2014 soybean stocks by 20 million bushels, twice what we expected, due to strong crush and exports. New crop carryout dropped another 5 million bushels due to increased crush," said Knorr
However, Knorr noted USDA's quarterly stocks due at the end of the monthly should provide better visibility of soybean supplies than Wednesday's numbers. Also, some soybean fields may not be planted this spring because of the abundant rain.
See the USDA crop report results for June 10 >>
In South America, USDA raised its forecast for Argentina's current soybean crop to 59.5 million metric tons from May's 58.5 million and left the next crop at 57 million. Brazil's soy crops were unchanged at 94.5 billion for the current one and 97 million for the next one.
See the full June 10, 2015, USDA WASDE update.
Results of the June 10 USDA crop report: