The WASDE Is Out, May the Kernels Fall Where They Will

USDA has now dropped the World Agricultural Supply and Demand Estimates in the much awaited October reporting. In a simple one liner, here is the gist of it – lower soy and corn yields this year (drought and lack of fertilizer – we saw this one coming), but wheat supply down, but higher than last year. Wheat is essentially a weed and has conditional consideration mostly to weather and also if the crop was planted, looks like we’re ok here.

Here are the quick numbers to set the tone:

Wheat – downgraded 133 million bushels to 1,650 million total world stock, slightly above 2021 amounts

Corn – downgraded 49 million bushels to 13.895 billion bushels for US. Here is the kicker – total world tonnage is estimated at 301.2 million, down 3.3 million, or about 1%, so not a huge decline

Rice – Pakistan flood really took a knock at global production, relatively unchanged economics for the US. There is also forecast lower consumption worldwide; food inflation seems to be curbing consumption perhaps.

Soybeans – downgraded on a net/net by 31 million bushels to 4.3 billion bushels domestically. However, consumption is set to increase

As such, the commodities markets have responded in kind:

Summary: Moderation. We have now seen the write-downs on the yields as we had expected. Droughts in North and South America has taken its toll, while the monsoon has hit Pakistani rice production hard. Yields in Europe were up, specifically in corn, but are not enough to really offset the losses by the US, Brazil and Argentina. The reason I am classifying this as Moderation, is that while we have more or less lower supply, the USDA is also forecasting lower demand. This is in part due to the inflationary pressures that have been in place since this time last year, coupled with a forecasted expectation of increased prices into 2023, central bank rate hikes, and possibility of a global recession. Food inflation should moderate for the remainder of the year due to lower demand, soy based products will continue to remain expensive, food prices overall will moderate based on a purely supply driven outlook but will not necessarily decline. Corporations squeezing profits higher is a variable we have to take into consideration.

“World Crop Quick Update,” Angry Bear (, Michael Smith