Dramatically lower US wheat production
On our initial run through of this month’s USDA supply demand estimates, the wheat numbers immediately jumped out. The USDA initial estimate for US 2026-27 total wheat production was 1.561 million bushels. This was down 424 million bushels from last year and came in below the smallest trade estimate. The decrease was due to both lower acreage and smaller yield. The USDA projected all-wheat yield at 47.5 bushels per acre, which would be 5.8 bushels lower than last year’s record yield. Wheat prices quickly shot up more than 30 cents immediately following the report release.
Larger corn carryout and smaller soybean carryout than expected
The second but less dramatic differences were slightly larger than expected US corn carryout estimates (both old and new crop) and slightly smaller than expected US soybean carryout (also both old and new crop). These discrepancies were much less significant than the wheat estimates. Corn prices were largely unchanged several minutes after the reports compared to the minutes prior to the report release, while soybean prices settled a few cents above where they were trading prior to the reports.
USDA finally increased South American corn production
After dragging their feet a couple of months, the USDA finally made upward adjustments to their South American corn production estimates. Nearly every other public and private agency had already increased their estimates more than once over the past two months. The USDA added a large 7 million metric tons to their Argentine corn production total, while also adding 3 million tons to their Brazilian corn production estimate. They left their South American soybean production estimates unchanged.
Wheat and soybeans are both on trajectory to resume their recent Sell Signals. Higher level wheat prices will justify additional sales.
We will go into more detail in tomorrow’s letter.
Source: USDA, Reuters