June 2024 USDA Supply & Demand

Nothing jumped out as a headline in USDA reports

The government didn’t change anybody’s mind with their numbers this month. The USDA only made small adjustments to their US and global supply demand numbers this month. The one area trade expected changes, in South American production, they continued to stick to their guns of higher production numbers. The USDA is not ready to follow the private South American estimates lower.

We are heading into the important part of the US crop growing season. It is hard to get crops rated much better than 75% good to excellent. Normally crop ratings will only go down from here, but ratings are still expected to be good again this week.

Expect choppy trade to continue.

USDA US Summary

The 2024-25 U.S. corn outlook is unchanged relative to last month. The season average price received by producers remains at $4.40 per bushel. USDA will release its Acreage report on June 28, which will provide survey-based indications of planted and harvested area.

The 2024/25 outlook for U.S. soybeans includes higher beginning and ending stocks. Higher beginning stocks reflect reduced crush for 2023/24, down 10 million bushels on lower soybean meal domestic use that is partly offset by higher exports. Soybean oil domestic use is also lowered for 2023/24 and partly offset by higher exports. With increased supplies for 2024/25 and no use changes, soybean ending stocks are projected at 455 million bushels, up 10 million.

The soybean price is forecast at $11.20 per bushel, unchanged from last month. Soybean meal and oil prices are also unchanged, at $330 per short ton and 42 cents per pound, respectively.

The outlook for 2024/25 U.S. wheat this month is for larger supplies, unchanged domestic use, increased exports, and lower stocks. Supplies are raised as all wheat production is forecast at 1,875 million bushels, up 17 million from last month on higher Hard Red Winter production more than offsetting reductions in Soft Red Winter and White Winter.

The all wheat yield is 49.4 bushels per acre, up 0.5 bushels from last month. The export forecast is raised 25 million bushels to 800 million, as U.S. wheat prices are expected to be increasingly competitive with reduced exportable Black Sea supplies. Ending stocks are lowered slightly to 758 million bushels but still significantly higher than the previous year. The 2024/25 season-average farm price is raised $0.50 per bushel to $6.50 on higher expected futures and cash prices and tightening global wheat supplies.

Source: USDA, Reuters, StoneX

May 2024 USDA Supply & Demand

This month’s WASDE report was surprisingly bullish for US corn and wheat, with old and new crop carryout estimates of both coming in smaller than trade expectations. Prices of corn and all three wheat crops continued to move higher shortly after the report release.

Lean into these continued rallies by making more sales of corn and all three classes of wheat. We were previously at 20% old crop and 10% new crop.

Add another increment of 10% to old crop, and 5% to new crop sales.

The USDA made some cuts to their South American production estimates, but overall, they cuts were smaller than trade expected. Thus, the USDA continues to lower their South American production estimates at a conservative pace.

Corn

The USDA cut 100 million bushels from their old crop (2023-24) US carryout estimate, which was 78 million below the average trade estimate.

Then the first 2024-25 carryout estimate for US corn came in 182 million bushels less than trade expected. The new crop production estimates begin with assumptions of 90.0 million acres planted and a 181.0 bpa trend line yield. The USDA made upward adjustments to Feed and Residual and Exports compared to the current year, while leaving ethanol production unchanged. This put the demand total for the new crop year 100 million bushels above the current crop year.

Soybeans

US soybean carryout for the 2023-24 old crop year was unchanged from last month, which was in line with expectations. For the 2024-25 new crop year, the USDA’s first US soybean carryout estimate was 445 million bushels, which exceeded trade expectations. This is an ample soybean carryout total for the new crop year. Bean prices initially dropped following the report, before recovering and moving a few cents higher.

The USDA assumed 86.5 million acres of soybeans will be planted, and their initial yield estimate for the 2024-25 new crop year was 52.0 bpa. Imports were down, while crush and exports both increased compared to the current year estimates.

Wheat

The USDA lowered their 2023-24 wheat carryout estimate by 10 million bushels this month, when trade expected them to essentially leave it unchanged. Their 2024-25 new crop wheat carryout came in 20 million bushels below the average trade estimate. These two smaller than expected carryout estimates continued to support the current wheat rally, which was largely stimulated by widespread freeze damage in Russia.

Wheat prices were higher following the report. Add to your wheat sales.

New crop wheat production was estimated at 1.858 billion bushels, which was 26 million less than trade expected.

Source: USDA, Reuters, StoneX

April 2024 USDA Supply & Demand

USDA report contained only small adjustments this month

Traders see today’s fundamental forecast showing more than adequate supplies and ending stocks. The South American corn crop is still at risk and the USDA has refused to lower their estimate as far as private trade estimates have fallen. All of the northern hemisphere crops are into their risk periods.

We have written virtually that same paragraph following each one of the most recent reports. The numbers have not really changed much since last fall, except the South American crops turned out to be smaller than expected. Today’s fundamentals have been well traded in recent weeks. There were no surprises today.

Now we are all focused don’t he growing conditions in all the major production areas in the world, especially the United States. Most areas are off to a pretty good start but it is just April and too soon to tell how good crops are going to be.

Today’s fundamentals tell traders that prices will be cheap this fall if we don’t have any weather problems in the United States or some other kind of black swan event that changes the way we view food prices.   

Source: USDA, Reuters, StoneX

March 2024 USDA Quarterly Grain Stocks & Prospective Plantings

US corn stocks and acreage smaller than expected

March 1st US corn stocks came in at 8.347 billion bushels, compared to 7.396 billion last year. Traders expected stocks to be about 80 million bushels larger than the government counted. Corn prices were further helped with the USDA estimating 90.036 million corn acres for 2024, down from 91.776 million expected by traders.

Beans and wheat stocks were both slightly higher than trade estimates and larger last year.

The important fundamentals this week came today. The USDA numbers gave us a positive surprise in corn. The technical price action, however, is more impressive.

After giving us Sell Signals in corn, beans, and some of the wheat contracts, prices fell sharply. The lows this week, however, were well defended today and it appears that we will close corn, beans, and wheat all above their respective 20-day averages, a positive performance in anybody’s book.

This means we will start next week with spec funds holding major short positions going against them in an uptrending market. I think they will be buyers and hope that we can get to another Sell Signal next week. Be prepared to make sales on April strength.

Source: USDA, Reuters, StoneX

March 2024 USDA Supply & Demand

USDA reduced world crop surplus.

Source: USDA, Reuters, StoneX

US 2023-24 grain carryout was left unchanged from last month except for a slight increase in wheat. As we’ve outlined in recent webinars, the USDA has not changed supply demand tables hardly at all since we began receiving them in May.

World carryout was reduced for each of the three crops we follow. In each case, production was slightly smaller and consumption was increased, thereby decreasing carryout. The USDA is still using a bigger corn and bean production estimates for South America than most of the private estimates, so these stock estimates will likely be reduced next month.

Twenty minutes after the report was released, corn, beans, and wheat were all sitting near their respective highs for the day. Corn moved solidly above the green line 20-day moving average. Look for a Sell Signal on Monday.

We have been waiting for this corn Sell Signal but hate the price level. Keep your sales small on Monday. If you need to generate cash, make sales. If you want to dribble out a few bushels of new crop that is OK too. We will be more willing sellers on the Sell Signal following this one.

February 2024 USDA Supply & Demand

The February USDA reports released Thursday was expected to be largely neutral, and the futures market’s immediate reaction appeared to confirm the predictions.

The ripple effect of the USDA’s bearish forecast on Brazilian soybeans in comparison to Conab’s more-aggressive cuts left futures stuck in place for a while as analysts weighed the ripple effect on U.S. exports and ending stocks.  Wheat futures quickly lost a dime or more while corn was little changed as well at midday.

Corn: U.S. ending stocks were increased to 2.172 billion bushels (bbu) based on lower domestic use while global production was reduced on declines in Brazil and Mexico. Foreign The average price projection was unchanged at $4.80 per bushel.

Soybeans: Slower exports cut the export forecast for the year by 35 MMT from January, leading to a new total of 1.72 bbu. Ending stocks were raised to 315 million bushels as the crush forecast remained unchanged, trimming the average price to $12.65 per bushel.

Wheat: U.S. wheat supplies for 2023-24 were projected at stable with exports little changed at 725 mbu. Ending stocks were raised to 658 mbu with prices unchanged at $7.20 per bushel. The global supply was increased while ending stocks were trimmed to 259.5 million metric tons (MMT), the lowest since the 2015-16 year.

South America’s 2023-24 production estimates were within expectations and not significantly changed from last month’s USDA projections. Brazil’s soybeans slipped to 156 MMT from 157 MMT. Corn was lowered from 127 MMT in January to 124 MMT, which was nary equal to the average estimates. Earlier in the day, Brazil’s Conab lowered its soybean projection to 149.4 MMT; the corn crop was cut 113.7 MMT and the outlook for the safrinha crop’ outlook was trimmed to 88.1 MMT. Projections for Argentina were unchanged from January and even with analysts’ predictions.

Source: USDA, Reuters, StoneX

January USDA Supply/Demand, Grain Stocks, & Winter Wheat Seedings

The USDA released six separate reports today at 11 am central time. You can see our table summarizing the key data below. We will digest this information today and over the long weekend to provide a fuller summary in our next letter on Tuesday next week (Monday is the MLK holiday).

Here are some quick bullet point highlights:

2023 US Production increased. US carryout increased.

In the annual Crop Production report, the USDA updated their final US 2023 crop estimates for corn and soybeans. While the USDA lowered their acreage totals for US corn and beans, they increased their yield estimates for both, which led to larger production totals and larger carryout estimates.

US 2023 Corn yield increased from 174.9 to 177.3 bpa.

US 2023 Corn production increased from 15.234 to 15.342 billion bushels.

US 2023 Soybean yield increased from 49.9 to 50.6 bpa.

US 2023 Soybean production increased from 4.129 to 4.165 billion bushels.

US carryout increased for corn (+31 million bu) and beans (+35 million bu) but was lowered slightly for wheat (-11 million bu).

From the US Supply & Demand tables:

Corn

Feed up 25 million bushels

Ethanol up 50 million bushels

Exports unchanged

Soybeans and Wheat

Both saw minimal changes outside of the production increase.

Exports unchanged. Soybean crushing unchanged.

World carryout increased

World carryout increased for corn (+10 million tons), beans (+390k tons), and wheat (1.83 million tons).

Quarterly Grain Stocks

The December 1^st US grain stocks for corn, beans, and wheat were all larger than trade expectations. Corn was up 13% from last year, beans were down 1% from last year, and wheat was up 8% from last year.

Winter Wheat Seedings

US 2024 winter wheat seeded area were down 6% compared to 2023. The totals for all classes were below the average trade estimates. However, world wheat output and supply both increased according to the WASDE report.

South American production

The USDA cut their Brazilian production estimates less than trade expected. The USDA is taking a cautious approach to assessing the Brazilian crops. But they did increase their Argentine soybean production estimate mare than expected, raising it 2 million tons to 50.0 million tons. They left their Argentine corn production estimate unchanged.

Prices lower after the reports

Overall, US and world carryout increased in today’s reports. There were no bullish surprises. Forty-five minutes after the reports were dropped, all our crop markets are trading sharply lower than they were prior to the reports. Buy Signals continue. Chicago and KC wheat are likely to join everything else in Buy Signals when trading resumes next week.

Source: USDA, StoneX, Reuters

December 2023 USDA Supply & Demand

US corn and wheat stocks slightly smaller. Bean numbers unchanged.

The market appeared disappointed. The USDA did not make a reduction to the Brazilian crop as traders expected, and the global soybean ending stocks continue to be very large and painting a Big Red Bar on our charts.

Bean prices have been stuck in a downtrend which keeps commodity funds active on the sell side of their order pad. On the other side of the order pad, we continue to hear from Brazilian producers concerned about their soybean crop, while the biggest buyer in the world, China, has been active.

We have Sell Signals in wheat. This is the time to decide if you need to complete your sales. There was little change in the wheat numbers, but the market reaction remains negative. The world continues to make large wheat purchases out of Russia.

This week we had the commodity funds helping the wheat market and prices remain well above the green line 20-day moving average. Commodity funds remain heavily short the wheat markets, we should see more buying from them with prices in an uptrend.

The corn market has moved up above the green line 20-day average this week, but as we are writing these comments, prices are right back down on the green line. Today’s report offered little for either the bull or the bear. This week CONAB reported that Brazilian corn acres would be down by 5.3% due to the late planning of beans.

Meanwhile, we remain in the middle of a South American weather market.

Source: USDA, Bloomberg, StoneX

November 2023 USDA Supply & Demand

Traders react bearish to USDA numbers

Corn

The USDA raised their US corn yield estimate by nearly 2 bushels, increasing their estimate from 173.0 to 174.9 bpa from October to November.

The USDA raised the 2023 US corn production to a record 15.234 billion bushels, up from 15.064 billion last month, and the average trade estimate of 15.079 billion.

Corn ending stocks for next fall were estimated at 2.156 billion bushels, up from 2.111 billion last month, and the average trade guess of 2.131 billion bushels.

Corn is in a 4-Box Buy Signal. Livestock producers should be purchasing feed.

Soybeans

The USDA bean yield was also increased, moving to 49.9 bpa from 49.6 bpa last month.

The USDA soybean production estimate was pegged at 4.129 billion bushels, up from 4.104 billion last month.

Soybean carryover increased to 245 million bushels, compared to 220 million bushels last month, and the average trade estimate of 222 million bushels.

Wheat

US wheat carryout for next July increased to 684 million bushels, compared to 670 million last month and the average trade estimate of 669 million bushels.

Thoughts

These numbers were not enough to change anybody’s opinion about supply and demand. Maybe the corn number increased enough to make a little difference there, but what is much more important is the weather down in Brazil, war in the Black Sea region, and global political uncertainty. 

Right now, we believe the soybean market is up on a peak due to South American weather worries, a big round of Chinese business, and commodity fund buying. We were thankful to get the soybean Selll Signal this week and hope you were able to sell the beans you needed. That being said, we look for higher prices next year on beans, unless the Brazilian weather stages a change for the better.

The wheat prices have been beaten down for weeks because offers out of Ukraine and Russia have been discounted below other world offers. In addition, commodity funds have built large net short positions. Wheat markets are way overdue for a bounce. When wheat prices move solidly above the 20-day moving average, we should get very active fund buying and a boost in price. Or as we saw this week, if ships are attacked, prices rally.  

Source: USDA, Reuters, StoneX

October 2023 USDA Supply & Demand

The USDA cut their US corn and soybean yield estimates slightly more than expected. Corn came in at 173.0 bpa, and beans at 49.6 bpa this month.

US corn and soybean carryout totals were both smaller than trade expected, while the US wheat carryout came in larger than expected.

The global carryout totals for corn, beans, and wheat were all smaller than trade expected.

Prices of corn, beans, and wheat were all trading higher 30 minutes following the reports, with beans seeing the largest gains.

From the USDA

COARSE GRAINS: This month’s 2023/24 U.S. corn outlook is for reduced supplies, lower feed and residual use and exports, and smaller ending stocks. Corn production is forecast at 15.064 billion bushels, down 70 million on a cut in yield to 173.0 bushels per acre.

Corn supplies are forecast at 16.451 billion bushels, a decline of 160 million bushels from last month, with lower production and beginning stocks. Exports are reduced 25 million bushels reflecting smaller supplies and slow early-season demand. Feed and residual use is down 25 million bushels based on lower supply.

With supply falling more than use, corn ending stocks for 2023/24 are lowered 110 million bushels. The season-average corn price received by producers is raised 5 cents to $4.95 per bushel.

The 2023/24 foreign coarse grain outlook is for slightly higher production, larger trade, and greater stocks relative to last month. Foreign corn production is higher on increases for Argentina, Moldova, the EU, and Paraguay.

Foreign corn ending stocks are higher, mostly reflecting increases for Ukraine and Moldova. Global corn stocks, at 312.4 million tons, are down 1.6 million.

Soybeans: US soybean production is forecast at 4.1 billion bushels, down 42 million on lower yields. Harvested area is unchanged at 82.8 million acres. The soybean yield is projected at 49.6 bushels per acre, down 0.5 bushels from the September forecast. The largest production changes are for Kansas, Michigan, and Nebraska.

Soybean exports are reduced 35 million bushels to 1.76 billion with increased competition from South America. Soybean crush is projected at 2.3 billion bushels, up 10 million, driven by higher soybean meal exports and soybean oil domestic demand. With lower exports partly offset by increased crush, ending stocks are unchanged from last month at 220 million bushels.

The U.S. season-average soybean price for 2023/24 is unchanged at $12.90 per bushel. Soybean meal and oil prices are unchanged at $380 per short ton and 63 cents per pound, respectively.

Global 2023/24 soybean exports are lowered 0.2 million tons to 168.2 million with lower exports for the United States partly offset by higher shipments for Brazil. Global soybean crush is increased 0.8 million tons to 328.5 million on higher crush for China and the United States. Global soybean ending stocks are lowered 3.6 million tons to 115.6 million mainly on lower stocks for China, Brazil, and India.

WHEAT: The outlook for 2023/24 U.S. wheat this month is for higher supplies, increased domestic use, unchanged exports, and higher ending stocks.  Supplies are raised 85 million bushels, primarily on higher production as reported in the NASS Small Grains Annual Summary, released September 29.

Domestic use is raised 30 million bushels, all on higher feed and residual use. Exports remain at 700 million bushels with several offsetting by-class changes. Projected ending stocks are raised by 55 million bushels to 670 million, up 15 percent from last year.

The season-average farm price is reduced $0.20 per bushel to $7.30 on higher projected stocks and expectations for futures and cash prices for the remainder of the marketing year.

The global wheat outlook for 2023/24 is for reduced supplies, lower consumption, decreased trade, and lower stocks. Projected 2023/24 global ending stocks are lowered 0.5 million tons to 258.1 million, the lowest since 2015/16.

Source: USDA, Reuters

Source: USDA, StoneX