Corn and wheat were lower while soybeans were higher over the past week. USDA released their monthly demand/supply report on August 12, and once again, there were more bearish surprises in the report.

 

The biggest shock was in corn. The US yield was put at 169.5 bu/ac, much higher than the 164.9 bu anticipated. That’s actually 3.5 bu higher than USDA predicted last month, despite the trying weather much of the eastern grain belt faced all spring.

 

They also dropped projected US exports by 100 million bu and corn for ethanol by 25 million. The final carry out (CO) then will be 2.181 billion bu. That is a massive 561 bu more than traders expected. Corn dropped limit on the “news” and another 16 cents today.

 

Acres were reduced by 1.7 million to 90 million. Most think that number will be reduced in further reports, but there is no guarantee that will happen. The corn crop is still far from maturity, so weather remains very important for the next 2 months.

 

The soybean yield was left unchanged at 48.5 bu/ac. Planted acres were reduced by 3.3 million to 76.7 million. Production then would drop 165 million from last month’s estimate. Exports were reduced by 100 million bu, however.

 

This puts the soybean CO at 755 million bu. This is a nice drop from the 1.07 billion bu that USDA says the US will have left over at Sept 1 this year. Unfortunately, that would still be the second largest CO in US history.

 

The US wheat fundamentals were left basically unchanged, with the CO still above the burdensome 1 billion bu mark. World wheat stocks were dropped a minor 1 million mt, so there is no shortage of wheat in the world either.

 

The Argentine peso dropped 25 percent in the past week. The new leader is not market-friendly, and higher taxes could be put on ag exports. A lower peso makes Argentine grain cheaper for foreign buyers.

 

Financial markets have become more volatile, as uncertainty is increasing in many parts of the world. The China/US trade deal is far from being settled. The situation in Hong Kong seems to be worsening. Relations between Iran and the US are deteriorating.

 

Gold keeps gaining as a result. Bond markets remain firm as interest rates ease. Evidence builds that world economic growth is slowing. The US federal government deficit so far this year is already greater than it was for all of 2018 at $867 billion.

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