Any changes by the USDA in corn and soy area and yield will have to wait for the August report. (08/12), but they got to work on the global wheat, dropping production in multiple countries, led by an aggressive drop in Russian production of 3.8 MMT to 74.2 MMT, the lowest, even when comparing to some of the Russian analysts that can sometimes be very dynamic. The USDA also hit EU production, (2.5), Australia, (1.5), Canada, (0.8),and Ukraine, (1.0). All of these have been (and continue to) suffer from dry weather and hot temps. This likely means we could possibly see further downgrades going forward. Strategie grain yesterday dropped their EU wheat production number by 2.2 MMT and corn number by 700k (The USDA did not alter their corn production number)
The downward adjustment of 9.5 MMT in wheat production, can be added to the 29.36 MMT drop in US corn production (which will almost certainly see a further downward adjustment) as well as the 8.12 MMT drop in US soybean production (ditto). That gives us a drop of 47 MMT so far. That is around 13% of total global stocks if one removes the Chinese stock numbers.
These downgrades will certainly grow further. The monsoon is 12% behind normal and that number, which had been narrowing, will start to widen again as rainfall is expected to slack off over the next two weeks. India has already imported or authorized to import 500K of corn. The USDA as well has, it seems chosen to ignore the drop in corn production in the southern cone of Africa. There have been serious weather related issues resulting in at least 2 MMT of losses. We could also add Mexico and its corn crop as their monsoon has not developed normally.
Corn and wheat have taken out their most recent highs, so expect more price gains. As we have reiterated, we have not yet seen the highs in prices so far this year.