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The USDA will release their July WASDE on Thursday, July 11th, at 11 am central.  We think the report could be bearish for corn and wheat, but has the potential for a bullish surprise in soybeans.  Take a listen to Turner’s Take Podcast to hear more.
WASDE Preview
Soybeans:
Soybeans have potential for a bullish surprise on Thursday.  The USDA will likely use the acres from the June report.  That means soybeans will have 80mm acres.  I think the USDA will also adjust yields.  The USDA adjusted corn yields down by 6% in the last report. I think soybeans could be 2% to 5% lower depending on how aggressive the USDA wants to get.  That gives us a yield between 47 and 48.  A 45 yield would be very aggressive.  The funds are short about 30K contract.  The risk for them is a bullish surprise. 
In the Soybeans Supply & Demand Scenarios below, 80mm acres and a 49.5 trend line yield gives us an Ending Stocks number of 800mm bushel.  If yield is cut to 47.5 then ending stocks could be 650mm.  If yield is 45.5 then ending stocks could be 490.  Anything below 45 bpa on 800mm acres and we start to see demand rationing (exports start to head lower while the crush stays the same).
In Turner’s Take Market Alert I wrote today about short dated call options for soybeans heading into the report.  If we get a bullish surprise it could be a nice trade.  If the report is neutral or bearish then we are out a few cents on an option.
Turner’s Take Soybean Supply & Demand Scenarios

Corn:
As I stated yesterday in Turner’s Take Ag Marketing we are 100% sold in old crop corn at an average futures price of $4.25.  We had some re-ownership ideas with Sept and Dec corn spreads.  They are probably good for the spec side too.  If you want to take your chances you can re-own a little now.  Then wait to see how bearish this corn report is with 91.7mm acres and then look to re-own a little more if prices drop.  
The June report has corn acres pegged at 91.7mm.  Ugh.  I think the USDA will use this number for the July report and then use the resurvey number in the Aug WASDE.  The big question for the USDA in the report on Thursday is what do they do with yield.  Assuming 91.7 acres, we have scenarios with 166, 163,and 160 yields.  Notice that the lower we go with production that we do need price rationing.  It will come from feed (hrw wheat is a substitute) and exports (we lose business to S.Am and Ukraine).
For corn to make new highs I think acres need to be in the mid to high 80s and yield needs to be sub 160.  If that combo is in the cards it can’t happen until August.  I’m guessing the July WASDE will be mildly bearish for corn with the potential to be bullish in August.
Turner’s Take Corn Supply & Demand Scenarios

WASDE ESTIMATES
U.S. Yield 2019/20

USDA July
Avg. Trade Est.
Trade Range
USDA June Est.

Corn
TBD
165.0
162.0-167.0
166.00

Soybeans
TBD
48.6
47.0 – 51.0
49.5

U.S. Production 2019/20 (billion bushels)

 
USDA July
Avg. Trade Est.
Trade Range
USDA June

Corn
TBD
13.664
13.100-13.960
13.