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Analysis Grains & Commodities

USDA Cereal Harvest Forecast Unleashes Tongues

12 August 2022 - Jurphaas Lugtenburg

The USDA was expected to tinker with revenue forecasts in the August edition of the Wasde report. Analysts were mainly focused on maize. USDA calculators have taken the market by storm with a remarkable change in soy.

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In the run-up to the Wasde report, analysts expected a smaller corn harvest in the US due to a lower yield per hectare. The USDA expects a smaller harvest, less use of corn for feed and other uses and a smaller ending stock. The expected ending stock for the US is therefore 1,388 billion bushels (approximately 35 million tons). That's about in line with trade expectations.

The surprise, however, is with soy in the report. The USDA has adjusted the starting stock upwards and expects a larger harvest, more exports and a larger ending stock. Analysts had not expected that. July and August are important months for soy growth. Large parts of the US are experiencing drought. The yield forecast for maize has been adjusted slightly downwards, partly for this reason. It is therefore remarkable that the yield of soy, which is largely grown in the same regions, is being increased. That can hardly be true, according to various analysts. What does the USDA see that we are missing, some wonder?

Record wheat harvest not enough
For wheat, the August edition of the Wasde report is fairly neutral. World production is heading for a new record harvest of 779,6 million tons. This is mainly due to good harvests in Russia, Australia and China. Wheat consumption is estimated at 788,6 million tons. The final wheat stock is slightly lower than in the previous edition of the Wasde report, at 267,3 million tons. That is still the smallest stock in six years. The wheat price could take another step upwards, regardless of developments in the Black Sea region, if this forecast is correct. After all, a record harvest is no longer enough to cover the demand for wheat.

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