July 2023 USDA Supply & Demand

USDA lowered US corn yield estimate but left beans unchanged

The USDA lowered their US corn yield estimate from 181.5 to 177.5 bushels per acre this month, while they left their US bean yield estimate unchanged at 52.0 bpa. Trade was expecting lower yield estimates for both (176.6 & 51.4 bpa, respectively). This put their 2023 production estimates above trade expectations.

The USDA estimates for next year’s carryout (2023-24) were larger than trade expected for corn, beans, and wheat. Of note, their 2023-24 soybean carryout estimate was 300 million bushels, 50% above the 199 million bushel average trade estimate.

Soybean prices dropped 40 cents lower on the larger than expected bean carryout.

In South America, the USDA offset changes in corn production by lowering their Argentine estimate 1 million tons at the same time they increased their Brazilian corn production estimate 1 million tons. They left their South American soybean production estimates unchanged from last month. 

Total wheat 2023-24 wheat production was larger than trade expected. The USDA increased their total wheat production estimate by 74 million bushels to 1.739 billion bushels. Trade was expecting a smaller increase to just 1.683 billion bushels.

From the WASDE report

Corn

This month’s 2023/24 U.S. corn outlook is for fractionally higher supplies and ending stocks. Corn beginning stocks are lowered 50 million bushels, as greater feed and residual use for 2022/23 more than offsets reductions in corn used for ethanol and exports. Corn production for 2023/24 is forecast up 55 million bushels as greater planted and harvested area from the June 30 Acreage report is partially offset by a 4.0-bushel reduction in yield to 177.5 bushels per acre.

According to data from the National Centers for Environmental Information, harvested-area-weighted June precipitation data for the major Corn Belt states represented an extreme downward deviation from average. However, timely rainfall and cooler than normal temperatures for some of the driest parts of the Corn Belt during early July is expected to moderate the impact of June weather. For much of the crop the critical pollination period will be in the coming weeks. With supply rising fractionally and use unchanged, ending stocks are up 5 million bushels. The season-average farm price received by producers is unchanged at $4.80 per bushel.

Soybeans

U.S. oilseed production for 2023/24 is projected at 127.6 million tons, down 5.6 million from last month with reductions for soybeans and sunflower seed, partly offset by higher canola and peanuts. Soybean production is projected at 4.3 billion bushels, down 210 million on lower harvested area. Harvested area, forecast at 83.5 million acres in the June 30 Acreage report, is down 4.0 million from last month. The soybean yield forecast is unchanged at 52.0 bushels per acre. With lower production partly offset by higher beginning stocks, 2023/24 soybean supplies are reduced 185 million bushels.

Soybean crush is reduced 10 million bushels reflecting a lower soybean meal domestic disappearance forecast. Soybean exports are reduced 125 million bushels to 1.85 billion on lower U.S. supplies and lower global imports. With lower supplies only partly offset by reduced use, ending stocks for 2023/24 are projected at 300 million bushels, down 50 million from last month. The U.S. season-average soybean price for 2023/24 is forecast at $12.40 per bushel, up $0.30 from last month. The soybean meal price is projected at $375.00 per short ton, up $10.00. The soybean oil price forecast of 60.0 cents per pound is up 2 cents.

The Environmental Protection Agency (EPA) issued the final renewable fuels standards rule for 2023, 2024, and 2025. The 2023 biomass-based diesel volume mandate was unchanged from the proposal published last December. For 2024, EPA increased the non-cellulosic advanced biofuel volume mandate but lowered the implied conventional volume. USDA assumes that biomass-based diesel would be produced in excess of the advanced biofuel volume mandate to make up the shortfall in conventional renewable fuel to meet the total renewable fuel obligation. With the offsetting changes compared to the proposal in 2024, there is no change to soybean oil used for biofuel for 2023/24 this month.

Wheat

Changes this month to the 2023/24 U.S. wheat outlook increase supplies and domestic use, leave exports unchanged, and increase ending stocks. Supplies are raised on larger production, which is up 74 million bushels to 1,739 million, on higher harvested area and yields. The first 2023/24 survey-based production forecast for other spring and Durum indicates a decrease from last year. Conversely, winter wheat production is forecast higher on larger harvested area and higher yields. Gains for all wheat production are partly offset by smaller beginning stocks, which are lowered 18 million bushels to 580 million as indicated in the Grain Stocks report, issued June 30. The 2023/24 ending stocks are forecast at 592 million bushels, 30 million higher than last month. The projected season-average farm price is forecast at $7.50 per bushel, down $0.20 from last month.

This month provides the first by-class 2023/24 U.S. wheat supply and use projections. Two consecutive years of drought-affected Hard Red Winter (HRW) wheat crops reduce HRW ending stocks to the lowest level in 16 years despite decreased total use. HRW food use is forecast to be the smallest since 2010/11, while HRW exports are the lowest since by-class supply and utilization records began in 1973/74.

Source: USDA/Reuters/StoneX

June 2023 Acreage & Quarterly Grain Stocks

Bean plantings fell well short of expectations, while corn plantings exceeded expectations.

The biggest surprise in the USDA numbers came in soybean plantings. The USDA June planted acreage for beans came in 83.505 million acres, compared to the average trade guess of 87.673 million acres. The USDA bean acreage estimate fell 3.5 million acres below the lowest pre-report guess of 87 million acres.

Corn acres were above the high of the pre-report estimates at 94.096 million acres. The high of the estimate range was 93 million acres. The average trade estimate of 91.853 million acres. 

An interesting trend in the data is that total principal crop planted acres in the western states ran above their previous estimates, while crops planted in the “I-states” were down from 0.75 – 1.1% from the prior estimates.

The bigger corn acreage number indicates farmers were happy with their corn planting conditions and kept on planting.

Corn stocks were down about 150 million bushels from the average trade guess. Bean stocks and wheat stocks were just slightly smaller than expected.

Source: USDA/Reuters/StoneX

June 2023 USDA Supply & Demand

Ho Hum USDA numbers keep weather as the main market focus.

 Sunday night’s opening will be a reflection of next week’s weather forecast. All of the fundamentals given to us by the USDA today will fade by comparison. So far, prices haven’t changed much since the reports were released.

Corn

The 2023-24 U.S. corn outlook is little changed from last month with increases to both beginning and ending stocks. Corn area and yield forecasts are unchanged.

Beginning stocks are up 35 million bushels reflecting a forecast decline in exports for 2022-23 that is partly offset by lower imports. Exports were lowered 50 million bushels. With no supply or use changes for 2023-24, ending stocks are raised 35 million bushels. The season-average farm price received by producers is unchanged at $4.80 per bushel.

The USDA cut their Argentine corn production estimate 2 million tons and raised their Brazilian estimate 2 million tons, canceling out the change in South America this month.

Soybeans

This month’s U.S. soybean supply and use projections for 2023-24 include higher beginning and ending stocks. Higher beginning stocks reflect reduced exports for 2022-23, down 15 million bushels to 2.0 billion based on lower-than-expected shipments in May and competition from South America.

With increased supplies for 2023-24 and no use changes, soybean ending stocks are projected at 350 million bushels, up 15 million. The soybean price is forecast at $12.10 per bushel, unchanged from last month.

The USDA also cut their Argentine bean production estimate 2 million tons, while increasing their Brazilian estimate by 1 million tons.

Wheat

Winter wheat production is forecast at 1.14 billion bushels, up 1% from the May 1 forecast and up 3% from 2022. As of June 1, the United States yield is forecast at 44.9 bushels per acre, up 0.2 bushel from last month but down 2.1 bushels from last year’s average yield of 47.0 bushels per acre. Hard Red Winter production, at 525 million bushels, is up 2% last month.

The outlook for 2023-24 U.S. wheat this month is for larger supplies, unchanged domestic use and exports, and higher stocks. Supplies are raised as all wheat production is projected at 1,665 million bushels, up 6 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 44.9 bushels per acre, up 0.2 bushels from last month but remaining below last year. Total use is unchanged with all of the production increase added to ending stocks, now projected at 562 million bushels.

The 2023-24 season-average farm price is lowered $0.30 per bushel to $7.70 on larger U.S. and foreign wheat supplies.

Source: USDA, Bloomberg

May Supply & Demand

New crop corn and beans posted new lows but wheat surged higher

US old crop corn carryout increased 75 million bushels from last month, which was 50 million bushels larger than the trade expected. Old crop bean and wheat carryout were virtually unchanged as the trade expected.

In the USDA’s first estimate for 2023-24, corn carryout came in at 2.22 billion bushels, up 800 million bushels from this fall’s forecast. Bean carryout for 2023-24 at 335 million bushels is up 120 million bushels from this fall’s estimate. Wheat carryout for next year was pegged down 42 million bushels from this year.

One of the biggest number changes came in the Brazilian corn crop, now estimated to be 130 million tons, up 5 million tons from last month. The 2023-24 world corn carryout was projected up 15.5 million tons from this fall’s estimate.

The 2023-24 world soybean carryout came in at 122.5 million tons, up 21.5 million from this year’s estimate.

World wheat carryout for 2023-24 slipped about 2 million tons year over year.

The market reaction has been negative for new crop corn and beans with these larger than expected production and carryout numbers. Kansas City wheat surged up to its resistance at $9/bushel for the July 2023 contract.

This week prices tried to rally but only Kansas City wheat and Minneapolis wheat were able to make gains. Technical selling pressure, better than normal planting progress, and a decent weather forecast stopped the corn and bean rally this week. Today’s report drove prices to new lows.

Source: USDA, Bloomberg, StoneX

April USDA Supply & Demand

Few changes in US numbers from last month. Smaller Argentine crops.

The government's US numbers were virtually the same as a month ago, with smaller crops in Argentina, and a slightly larger bean crop in Brazil. Today's estimates were no surprise to the traders. 

Look at the prices we've traded during the past month. Traders have no fundamental reason to move prices beyond that range. The Argentine crop is still an uncertainty because its in the early stages of harvest, but the Brazilian bean crop is nearly in the bin and the second crop corn is off to a good start.

The new risk is in the United States and all the northern hemisphere where planting has just started. Next month's prices will trade based on how traders view the crop plantings and weather risk. Today's numbers told us again that we need big crops. 

Traders will turn their attention to the weekly planting progress numbers, exports, and ultimately the May USDA report where we see the first official 2023/24 crop estimates.

Source: USDA, Bloomberg

March USDA Quarterly Grain Stocks & Prospective Plantings

US soybean stocks and plantings smaller than expected.

There weren't huge surprises in the March 31 USDA reports. Overall, the reports trended bullish for soybeans.

March 1 US soybean stocks were 57 million bushels smaller than the average trade estimate, and intended acres to be planted were 737,000 acres smaller than the trade estimate. Bean prices were quickly up about 30 cents following the report release. 

For corn, March 1 stocks were 69 million bushels small than the average trade estimate, but prospective plantings came in 1.116 million acres above the average trade estimate.

Wheat stocks were 12 million bushels larger than expected, and Wheat plantings totaled a little more than 1 million acres larger than the trade expected.

The current rallies are providing an opportunity to dribble a little more corn into the market on our current Sell Signal, and we are not far away from generating a soybean Sell Signal that we are looking forward to making more sales on.

We have learned historically that selling corn in April and beans in May are very good strategies, if there is not a substantial weather problem through the US growing season.

The uncertainty of the South American second corn crop and the entire North American crop, combined with uncertainties in the Black Sea region have pushed our crop markets higher this week.

The bottom line is that until we start to see something develop, we have limited upside potential. 

We are happy to have the rallies to make sales on. Keep powder dry for summertime problems.

Source: USDA, Bloomberg

March USDA Supply & Demand

U.S. Corn Carryout Grows while Argentine Crops Shrink

Today’s USDA Supply & Demand report was a mixed bag of information.

U.S. Corn exports were reduced 75 million bushels from the February estimate, leading to a larger than expected jump in domestic ending stocks. On the other hand, Argentina’s corn production estimate was reduced 3 million tons more than expected.

The bean numbers were bullish, causing an initial jump in futures prices that has since cooled off (as of this writing). A 10 million bushel cut to U.S. crush was more than offset by a 25 million bushel increase in exports, leading to a net reduction in ending stocks of 15 million bushels. Pre-report trade was expecting just a slight 5 million bushel decrease in carryout.

Argentina bean production was reduced from 41 million tons to 33 million, smaller than the average trade guess of 36.55.

The U.S. wheat balance sheet was left unchanged. World wheat supplies shrank slightly, though that cut was largely attributed to an adjustment to China’s 20/21 feed and residual use carried through to world new crop beginning inventory. 

Without any major surprises in today’s report, traders will shift their interest to the closely followed Grain Stocks & Prospective Plantings reports due out at 11:00am on March 31st.

Source: USDA, Bloomberg

February USDA Supply & Demand

Small fundamental changes disappoint bullish traders

After the USDA released its numbers, prices slid across all crop markets before bouncing 15 minutes later.

Kansas City wheat gave us the strongest post-report trade. KC March wheat rallied to new recent highs following the report with traders concerned about dry weather forecast in the western Southern Plains. Chicago and Minneapolis wheat also firmed but are currently trading below recent highs.

This month’s 2022-23 U.S. corn outlook forecast lower corn used for ethanol by 25 million bushels. With no other use changes, U.S. corn ending stocks are up 25 million bushels from last month.

The USDA lowered US soybean crush by 15 million bushels. With soybean exports unchanged, ending stocks are forecast at 225 million bushels, up 15 million.

The 2022-23 U.S. wheat supply and demand numbers were little changed this month, with only minor revisions to domestic use and ending stocks.

The global numbers contained no shocks either.

Argentine production estimates were smaller than traders expected but were well below the USDA’s January estimates.

Source: USDA, Bloomberg

January USDA Supply & Demand, Quarterly Grain Stocks, and Winter Wheat Seedings

USDA Summary

The USDA final crop production estimates for 2022 were lowered for corn and soybeans, 200 million bushels and 70 million bushels, respectively.

The smaller corn and bean productions totals were a surprise to the trade, who expected US production numbers to be increased slightly.

Corn production was reduced due to a surprising cut of 1.64 million harvested acres. The smaller acres offset a bigger national average yield, which was increased from 172.3 to 173.3 bpa.

Bean production was cut due to a combined 0.4 bpa reduction in yield and 295,000 acreage reduction.

The USDA reported winter wheat plantings totaling 36.95 million acres, a larger than expected 3.7 million acre increase. Traders expected US winter wheat acreage to be increased by just 1.2 million acres.

US wheat acres rebounded due to the high crop insurance guarantees, following recent years of lower wheat acreage plantings.

US carryout estimates for corn, beans, and wheat were all lower than the December estimates. This was a surprise, with most traders expected carryout to increase slightly across the board.

Corn and bean prices were sharply higher on the surprising reductions. Wheat prices struggled initially after the report due to the higher US acreage total and impressive wheat crops expected out of Australia and India.

So far, our Buy Signals on corn and wheat this week have worked quite well.

US quarterly stocks were smaller than last year and smaller than the average trade estimates. In fact, each were near the low of the range of trade estimates. 

In Brazil, soybean production was increased 1 million tons to 153.0 million metric tons, while Brazilian corn production was reduced 1 million tons to 125.0 million tons.

Argentine bean production was lowered more than expected, dropping from 49.5 to 45.5 million tons. Argentine corn production was cut from 55.0 to 52.0 million tons, which was in line with trade expectations.

World carryout numbers were reduced about 2 million tons for corn but increased nearly 1 million tons each for soybeans and wheat.

Source: USDA, StoneX, Reuters

Source: StoneX, USDA

December USDA Supply/Demand

The USDA made few changes to their supply demand numbers in the December WASDE report.

They made no changes to their US wheat and soybean supply demand numbers.

They cut US corn exports by 75 million bushels, acknowledging the slow pace of corn sales and shipments. This increased their US corn carryout total by 75 million bushels.

There were few changes to the world supply demand numbers. Beans and wheat were largely unchanged from last month. The world corn carryout total was reduced by 2.36 million tons (-0.8%), which was the largest change made to the world numbers.

The USDA also left their South American production estimates unchanged this month.

Friday’s USDA report had very limited impact on prices. Even though the government cut exports, the corn market traded higher following the release of the numbers. Soybeans also were able to move higher after the numbers came out, but wheat prices slid on the lack of improved numbers.

Source: USDA, Reuters, StoneX