The US Department of Agriculture (USDA) has provided a fresh take on the global grain outlook in its June World Agricultural Supply and Demand Estimates (WASDE) report, which was released last week.
Surprisingly, the news was relatively subdued and the report was quickly overshadowed by talk of ongoing global weather issues, particularly in the United States.
Corn has a firm grip on the global grain market's steering wheel at the moment, and most traders and analysts were expecting quite bullish news from the USDA.
While that was the case on-the-whole, there were still some confusing numbers - particularly the cautious approach taken to Brazilian production issues.
This season's corn production woes in Brazil are well-documented and some local analysts have pegged production numbers at below 90 million tonnes.
But the USDA decided to kick the can a little further down the road, it seems, reducing that country's current season production by just 3.5 million tonnes month-on-month to 98.5 million tonnes.
In the US, corn exports for the 2020-21 season were raised by 1.9 million tonnes - to a record 72.39 million tonnes - on the back of a huge spike in demand from China.
But the China import number was unchanged at 26 million tonnes, which appears conservative based on the unexecuted export sales still on the books and the low rate of cancellations.
The US ethanol grind was also raised by 1.9 million tonnes, as recent corn crushing, ethanol production and ethanol stocks data suggests demand is approaching levels similar to the period prior to the coronavirus pandemic.
The net effect of these changes was a lower than expected US carry out number of 28.1 million tonnes, which was down 3.8 million tonnes compared to the USDA's May WASDE report.
Overall, global corn production for the 2020-21 season was trimmed by 3.4 million tonnes compared to last month - to 1125 million tonnes - reflecting the Brazilian crop downgrade.
Worldwide exports were pegged at 187 million tonnes, which was fractionally higher than in the USDA's May report.
Global ending stocks came in at around expectations, down 2.9 million tonnes from the May report at 280.6 million tonnes.
Global corn production in 2021-22 is forecast to increase by 5.7 per cent year-on-year to a tad under 1190 million tonnes.
Global consumption is projected to be 2.7 per cent above current season levels, at just over 1181 million tonnes, and should result in an increase in global ending stocks of almost 9 million tonnes at 289.4 million tonnes.
Exports are expected to increase by about 10.5 million tonnes to a record 197.5 million tonnes.
Interesting among the USDA's new crop numbers was a 10 million tonne drop in US exports to 62 million tonnes against a current season Brazilian crop that is getting smaller by the day, and is over-quoted by as much as 8 million tonnes in the WASDE report.
Surely the US will have to fill the resultant supply gap when new crop production comes online.
Eventually the numbers will tell the story.
But only when the USDA decides to pick up the can and admit the production hole in Brazil.
On the surface, it may seem surprising that new crop US production numbers remained unchanged - given 30 per cent of its corn belt is suffering from varying degrees of drought.
But there will be a USDA stocks and acreage update at the end of June that is widely expected to reveal a seeded area much higher than what was reported in March.
Informa released updated survey results last week, suggesting that the area planted to corn could be as high as 39.2 million hectares.
That is 2.3 million hectares more than the USDA's March planting intentions number and will help compensate for production currently being lost due to moisture deficit conditions in several key growing regions.
The USDA loosened the global wheat balance sheet a little in last week's WASDE report.
It forecast world production to rise 2.4 per cent - or 18.6 million tonnes - year-on-year to a record 794.4 million tonnes in the 2021-22 crop year.
The highlights are a rebound in European Union production compared to its 2020 harvest and another record crop In Russia.
Month-on-month, the USDA revised the EU wheat crop up by 3.5 million tonnes to 137.5 million tonnes, the Ukraine crop up by 0.5 million tonnes to 29.5 million tonnes, the US crop up by 0.7 million tonnes to 51.7 million tonnes and the Russian crop up by 1 million tonnes to 86 million tonnes.
The higher US production and no decrease for Canadian output was a surprise considering the extreme drought conditions in the Northern Plains and north onto the Canadian Prairies.
Similarly, the spring wheat regions of Russia have been suffering under severe moisture stress.
But Russia's winter wheat regions, which account for almost 70 per cent of its wheat production, have enjoyed ideal growing conditions this year - apart for some winterkill in Central Russia.
Leading Black Sea consultancy SovEcon raised its Russian crop ideas by 1.5 million tonnes to 82.4 million tonnes last week, citing excellent winter wheat growing conditions this season.
On the demand side of the wheat equation, the USDA raised global consumption for the 2021-22 marketing year by 2.4 million tonnes, compared to May, to 791.1 million tonnes.
This represents an annual increase of 1.2 per cent - or 9.6 million tonnes.
Global trade is also on the rise.
Exports were revised up by 0.8 million tonnes from the USDA's May forecast and 4.9 million tonnes higher than the 2020-21 level, to a record 203.2 million tonnes.
The soybean story held very few surprises.
Global production in the current season was increased by 1.1 million tonnes to 364.1 million tonnes.
Brazil was the responsible party, with its crop pegged at 1 million tonnes higher than the May forecast - at a record 137 million tonnes.
Brazil carry out was the beneficiary, up 1 million tonnes to 23 million tonnes.
Although, China has been snapping-up as much of the Brazilian crop as it can get, making an increase in ending stocks less likely with every new sale.
In the new crop slot, global production, consumption and trade numbers were unchanged compared to the USDA's May report.
But the department is forecasting an annual increase in global production of almost 6 per cent, or 21.5 million tonnes, compared to the 2020-21 season.
That would put world output at a record 385.5 million tonnes, underpinned by increases of 7 million tonnes in both Brazil and the US and a 5 million tonnes rise in Argentina.
Now the June WASDE report is released, all eyes will be firmly focused on the Northern Hemisphere weather in the lead up to the June 30 Grain Stocks and Acreage Reports.
These reports mark a crucial juncture in this year's proceedings, particularly for corn.
The market has already factored in a much higher corn area.
Dryness is building across the US corn belt, and the magnitude of the increase is becoming even more crucial to the direction of global grain markets.
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