The May USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports released on Friday gave us the first glimpse of U.S. wheat production and row-crop balance sheets for the 2024-25 crop year. The reports showed few major surprises in wheat or soybeans, but a reduction in ending stocks for corn in both crop years sent that market to solid gains. All-wheat production was modestly bullish with the production estimate falling 40 million bushels (mb) below trade expectations.

Here is a closer look at some of the key numbers in Friday's reports:

CORN

Corn futures rose in impressive fashion following not only a lower-than-expected carryout for old crop but also for the 2024-25 crop year. Using the 90 million planted acres, corn production was pegged at 14.9 billion bushels (bb) -- about as expected, as acres were down, but a lofty and record yield estimate of 181 bushels per acre was used. Ending stocks for 2023-24 were expected to fall to 2.098 bb, but instead came in lower at 2.022 bb on higher domestic usage, and exports were boosted by 50 mb. For 2024-25, USDA moved food, seed and industrial up 50 mb and exports up 50 mb to 2.2 bb, with no change in corn for ethanol. The export increase was in response to the combined drop of over 5 million metric tons (mmt) of corn exports for Argentina, Brazil, Russia and Ukraine. Ukraine production is expected to be down on reduced area and yield. The resulting 2.102 bb ending stocks figured to be 154 mb lower than the Dow Jones trade pre-report survey had estimated. The season average farm price for corn fell to $4.40 per bushel from $4.65.

On the world front, both old- and new-crop ending stocks fell, with 2023-24 falling over 5 mmt to 313.08 mmt (12.3 bb). The ending stocks for 2024-25, with the average estimate expecting 317.4 mmt, instead fell to just 312.3 mmt (12.29 bb), mostly as the result of lower stocks in both Brazil and Ukraine. Brazil's corn crop was cut by 3 mmt to 122 mmt (4.8 bb) -- a bit higher than expected, but still miles above CONAB's corn estimate of 112 mmt (4.41 bb). Argentina's corn crop was dropped just 2 mmt to 53 mmt (2.08 bb), while traders were looking for 52 mmt. The extent of the leafhopper damage is still to be determined.

The WASDE report was deemed bullish for corn with lower stocks than expected for both the U.S. and the world. The jury is surely still out on Brazil corn production with flooding in the south and hot and dry weather in the central and northern safrinha corn areas of Brazil likely hurting prospects there.

Closing prices for corn Friday were: July corn $4.69 3/4 up 13 1/4 cents and December corn $4.92, up 12 cents.

SOYBEANS

Soybean futures closed with a solid gain in old-crop futures and a modest nickel gain in new-crop November following what was a mostly neutral WASDE report. Soybean oil, after scoring a new contract low on Thursday, rocketed higher by close to 2 cents, while the soymeal market was left alone, trading in the red.

The soybean old-crop balance sheet was left untouched with ending stocks staying at 340 mb. New-crop production, on higher acres and a record yield, was forecast to be 4.450 bb, or about 20 mb above trade expectations. The 4.450 bb production is up sharply from last year's 4.165 bb. On the 2024-25 balance sheet, imports were lowered by 10 mb, while crush was increased a lofty 125 mb to 2.425 bb, with exports also raised by 125 mb to 1.825 bb. Ending stocks for 2024-25 were estimated to be 445 mb, or about 13 mb above the Dow Jones trader average estimate. The average farm price for soybeans was dropped to $11.20 per bushel from $12.55 the previous year. The season average price for soymeal fell $50 to $330 per short ton for 2024-25. The average price for soybean oil was dropped 6 cents to 42 cents. On a bullish note, the amount of soybean oil used for biofuel stock was increased by 1 million pounds to 14 million pounds, sending the oversold bean oil market to big gains.

On the world side, traders were anxious to see USDA revisions to South American production following heavy rain and flooding in southern Brazil. Once again, USDA remained conservative in making changes, with Brazil's soy crop dropped by just 1 mmt to 154 mmt (5.66 bb). That is still some 7.5 mmt (276 mb) higher than CONAB's last estimate, which will likely be revised on Tuesday, May 14. The estimate for Brazil's 2024-25 soy crop rose to a record-by-far 169 mmt (6.2 bb). Argentina's soybean production was revealed to be 51 mmt (1.87 bb) -- slightly higher than traders expected. China's soy imports for 2024-25 were increased by 4 mmt to a record-large 109 mmt (4.0 bb). World ending stocks for 2023-24 were reduced slightly to 111.8 mmt (4.1 bb) from 114.2 mmt (4.2 bb) in April. For 2024-25, world ending stocks rose well above the average trade estimate of 120 mmt (4.4 bb) to a record-large 128.5 mmt (4.72 bb), mostly as the result of the lofty new-crop Brazil estimate. Overall, I would say that the May WASDE was fairly neutral, but the market, already higher, finished that way.

July soybeans closed at $12.19 on Friday, up 10 1/2 cents, and November beans closed at $12.05 3/4, up 5 1/4 cents.

WHEAT

The wheat market was already considerably higher prior to the release of the May USDA and WASDE reports but was able to build on those gains following a modestly bullish report. For starters, all-wheat production came in about 31 mb lower than the average Dow Jones estimate at 1.858 bb. Of that, winter wheat, at 1.278 bb, was 27 mb lower than expectations. On a by-class breakdown, hard red winter wheat, at 705 mb, was up 17% from last year and 31 mb above trade expectations. Soft red winter was estimated to be just 344 mb with traders looking for production of 413 mb. White winter wheat finished at 229 mb, with soft white at 211 mb. Higher feed and residual use and higher exports for both 2023-24 (10 mb) and 2024-25, sent ending stocks lower. The 2024-25 ending stocks were pegged at 766 mb, 20 mb less than expectations, but the highest in four years. The season's average farm price for wheat was lowered by $1.10 per bushel to $6 per bushel.

On the world side, changes included lower carry-in stocks for Russia and China and higher production for China, Australia, Canada and the U.S. The all-wheat U.S. production, though less than expectations, was still up 46 mb from last year. Production was lowered in Russia, Ukraine, the EU and UK for 2024-25. Russia's wheat crop fell by 3 mmt to 88 mmt (3.23 bb), with a crop in exports to 52 mmt from 53.5 mmt (1.97 bb). Ukraine's production was slated to fall to 21 mmt (771 mb) from 23 mmt (845 mb) this year. World ending stocks were lowered 4.2 mmt from a year ago, to just 253.6 mmt (9.32 bb) and the lowest since 2015-2016.

The wheat market, already on a move higher from frost fears in Russia, ended up closing even higher, with Chicago leading the way on lower soft red winter production and fund short covering. Overall, the WASDE report was considered neutral to slightly bullish for wheat.

July Chicago wheat closed at $6.63 1/2, up 26 cents; July KC wheat closed at $6.73 1/4, up 21 1/2 cents; and July Minneapolis wheat closed at $7.20, up 16 1/4 cents.

FINAL THOUGHTS

Now that the May WASDE is out of the way, traders will again focus on South American weather, as the jury is still out with heavy rain and flooding in southern Brazil with just over 20% of the harvest left to go.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow Dana Mantini on Twitter @mantini_r

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