WASHINGTON, D.C. — The USDA reduced this year’s wheat production numbers and trimmed the size of the 2014 soybean crop in reports released last week by the agency.
"It was almost unprecedented that the USDA lowered their wheat production estimate," said Bill Tierney, chief econo-mist with AgResource Co. "This is almost always the final estimate of this year’s wheat crop. They cut the size of the crop by 84 million bushels. They did that by cutting the planted area by 1.435 million acres. They reduced yield by half a bushel.
"You can always cut yield in this report, but to cut planted area, they had to get some new information. In all likelihood, it was information in Farm Service Agency data."
In the Small Grains Summary released Sept. 30, the USDA’s National Agricultural Statistics Service (NASS) said wheat production was 2.015 billion bushels, up 1 percent from last year. Acreage harvested for grain was 47.1 million, up 2 percent. Yield is projected to be 43.6 bushels per acre, down 0.1 bushel.
As a result of the reduction, the wheat balance sheet will tighten considerably, Tierney noted.
"I don’t think it’s enough to change the dynamics of the market," he said.
"Even though for the U.S. the balance sheet looks friendly, I think from the standpoint of global supply and demand, I don’t see much change. Globally, we have too much wheat chasing too little demand."
In its Grain Stocks report, also released Sept. 30, NASS revised its soybean production, acreage and yield numbers for 2014. The year’s production was 3.93 billion bushels, down 41.7 million from earlier estimates.
Planted acreage was 83.3 million, a decrease of 425,000 acres.
Harvested acreage was 82.6 million, a decline of 470,000 acres. Average yield was reduced 0.3 bushel, to 47.5 bushels per acre.
"If they hadn’t done that, stocks would have been significantly larger than the trade expected," Tierney explained. "While this may look friendly – that soybean stocks were smaller than expected going into next year – at this point and time that’s almost irrelevant. The market is overwhelmingly focused on yield potential for this year’s crop."
The report updated grain stocks as of Sept. 1. Old-crop corn stocks were up 41 percent, from 1.2 billion bushels last year at this time to 1.73 billion. USDA reported a June-August disappearance of 2.72 billion bushels, up from last year’s 2.62 billion.
Old-crop soybeans stocks were 191 million bushels, up 108 percent from last year’s 92 million. The soybean disappearance from June-August was 436 million bushels, up 39 percent from the same period last year.
All wheat stocks were 2.09 billion bushels, up 10 percent from last year’s 1.9 billion. Wheat had a June-August disappearance of 716 million bushels, up 1 percent.
The volatility of the grain market was evident last week immediately after the reports were released, said Virginia McGathey, president of McGathey Commodities. The soybean market saw a 17-cent range within the first minute.
"As soon as the soybean number came out, it was definitely friendly to soybeans, and I think the expectation was going to be a little bit the other way. The market rallied so hard, up over $9. It never really was able to get back above $9 for the rest of the day," she said.
Wheat numbers were also friendly and a surprise, she added. The wheat market had a 15-cent range within the first minute. "The corn report was relatively neutral, but it was definitely ‘buy the rumor, sell the fact,’" McGathey said. "They got that sinking feeling in corn and the market dropped about a dime right after the report, and then started to build back up again."