As usual, the USDA's August production and supply/demand reports had some surprises for the trade, with this year's U.S. corn crop and world wheat output higher than expected-while U.S. new-crop soybean stocks were lower. However, the weather conditions in next two to three weeks of the Midwest and the next four to five weeks in Delta/SE will finalize this year's corn and soybeans outputs for 2007/08 crop years.

For the second year in a row, the USDA jumped out with an aggressive first U.S. corn crop estimate of 13.05 billion bu. That is 150 million higher than the average trade guess, and the national yield level of 152.8 bu. This year's strong jump in plant population seems to be behind this higher yield estimate. The WCB has the highest regional increase of 8.4 bu. to 159.3 bu., with IA (180), NE (168) and SD (117) projecting the best yearly improvements. The ECB prospects are also expected to be higher (158 bu., up 1.2) because of higher yields in IL (178) and WI (145); summer dryness, however, cut yields vs. year ago in OH (-16 bu.), MI (-36 bu.) and PA (-12 bu.). Drought also cut the Southeast's yield projections by 24 bu. per acre, but higher seedings kept 2007 output potential 29 million bu. higher. Strong yield prospects in the Plains are countering dryness in the mid-South, leaving the SW/Delta region up 4.2 bu. per acre. Decreases in the USDA's world coarse grains and corn stocks of 6 mmt because of weather problems in the EU and FSU prompted a 150 million bu. jump in 2007/08 corn exports-leaving stocks near 1.5 billion for the coming year.  

The USDA also cut this year's winter wheat crop by 24.6 million bu. to 1.537 billion because of reduced harvested acres in KS, and slight reductions in SRW and WW crops. The latest spring wheat update was also left near unchanged at 500 million bu., with 76 million bu. this month for HRS and Durum. The USDA's modest 1.8 mmt tightening of world wheat stocks was a bit surprising given Europe's difficult harvest. But ongoing wet conditions in the EU and dryness in Canada could further increase U.S. exports, which were raised 25 million this month.