The June supply and demand report issued by the US Department of Agriculture (USDA) had limited impact on the grain market, particularly the wheat market, which is already in a losing trade. Prices of wheat and soybeans fell further as the USDA kept its South American production estimates unchanged due to data released in the report showing that production of American hard red winter wheat increased, production of Brazilian soybeans and Russian wheat fell less than expected, and the decline in global wheat imports.

Grain market analyst Jacqueline Holland pointed out that the market had expected the USDA to make larger cuts to Brazil's soybean crop production in 2023/24, especially after the floods in southern Brazil last month. But Rio Grande do Sul

The .0 flood affected only 5% of soybean crops, which was not enough to push the USDA to lower Brazil's production estimates by more than 1 million tons.

Holland believes that the market overestimated the damage caused by the floods and did not take into account the correlation with Brazil's June soybean shipment speed, which is expected to set a new June soybean shipment record this month.

corn market

The USDA maintained the same forecast as in May, and the average price also remained at $4.40 per bushel. The USDA also said it will release a key acreage report on June 28, which will provide survey-based indicators of planted and harvested area.

The final inventory of corn in the US 2024/25 was 2.102 billion bushels, slightly higher than the average market forecast of 2,079 billion bushels. Global corn stocks fell slightly to 12.235 billion bushels at the end of the period.

Holland said that the market is too optimistic about cuts in second-season corn production in Argentina and Brazil. She believes that the USDA is unlikely to make additional cuts to South American corn production until the harvest progresses across the continent.

Soybean market

The USDA's latest outlook shows an increase in soybean stocks at the beginning and end of the period. The decrease in pressing volume in 2023/24 led to an increase in inventory at the beginning of the period, and the decrease in domestic use of soybean oil in this market year was partially offset by an increase in exports. Soybean stocks increased by 10 million bushels at the end of the period to 455 million bushels. The price forecast remained unchanged at $11.20 per bushel, and the prices for soybean meal and soybean oil remained at $330 per short ton and 42 cents per pound, respectively.

In South America, the USDA slightly reduced Brazil's production potential to 5.621 billion bushels, while Argentina's production remained unchanged at 2,087 billion bushels. Global soybean stocks declined slightly at the end of the 2024/25 period, with a new estimate of 4.669 billion bushels.

wheat market

The USDA expects an increase in US wheat supply in 2024/25, with domestic use remaining unchanged, exports increasing, and stocks falling. Production increased by 17 million bushels to 1,875 million bushels due to improvements in production based on hard red winter wheat. The yield of all wheat is estimated to have increased by 0.5 bushels to 49.4 bushels per acre.

Wheat export potential increased by 25 million bushels to 800 million bushels. The USDA notes that as exportable supply in the Black Sea region decreases, US wheat prices are expected to become more competitive. Inventory fell slightly to 758 million bushels at the end of the period. Futures and cash prices are expected to rise based on global supply constraints, increasing the average price by 50 cents per bushel to $6.50/bushel.

Global wheat stocks fell slightly to 9.268 billion bushels in 2024/25, higher than market expectations of 9.228 billion bushels, and lower than market expectations.

(The above is from the latest opinion of FarmProgress analysts Ben Potter and Jacqueline Holland)