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

November USDA Supply/Demand

USDA raises corn and bean yields slightly; little change in stocks.

Although it was not immediately apparent in the USDA supply demand report, Argentina is moving into a key role in world corn prices.

The USDA forecast total world coarse grain exports at 225.12 million metric tons in today’s report. 59.22 million tons were forecast to be shipped from the United States, with 46.5 million tons from Argentina, and 47.03 million tons from Brazil. That Argentine number was down half a million tons from last month.

Drought in Argentina is threatening their corn crop and moving that country into a more important role in corn prices. Our weather consultant didn’t see immediate relief for the Argentine drought in his report this morning.

The majority of the Brazilian corn crop is planted as a second crop following soybeans and won’t have much impact on our market for several months.

Meanwhile, corn prices have been beat down due to low water in the Mississippi and discounted feed grain prices in the Black Sea region. Our system is giving us the sixth day of a Buy Signal on corn, with prices as cheap as they’ve been since September.

If you are wanting to re-own sold corn or purchase feed needs, this is a good time to do it.

Today’s USDA report did not change soybean fundamentals, available US supplies are still relatively tight, and a monster crop is being planted in Brazil.  
 
Today we saw another round of soybean purchases by China. The US is about the only store in town until the Brazilian crop harvest. Midwest rains have helped the low water conditions in the Mississippi River and soybean oil demand has been strong due to tight diesel supplies.  
 
US wheat carryover was reduced by 5 million bushels. Traders are much more interested in the crop conditions in US winter wheat country where it is too dry. The US winter wheat crop was rated just 30% good to excellent (51% five-year average) in Monday’s Crop Progress report. 
 
All three of the crop markets we follow have been in trading ranges for weeks. There wasn’t enough fundamental change in today’s reports to take us out of those trading ranges immediately. Keep an eye on South American weather. 

Source: USDA, Reuters

October USDA Supply & Demand

USDA lowered US corn and bean yield estimates

Quick summary

• US corn yield as expected
• US soybean yield smaller than expected
• US wheat carryout larger than expected due to lower demand

The USDA’s October corn yield and production estimates were smaller than the September numbers but largely in line with trade estimates. New crop corn carryout was reduced from September but by only about half as much as trade expected.

December corn was only a few cents lower following the report release.

The surprise this month came from a lower than expected US soybean yield estimate. The USDA pegged the US bean yield at 49.8 bpa, compared to 50.5 bpa last month. Trade was expecting an even to slightly higher bean yield. The 49.8 bpa estimate matched the lowest trade guess.

Soybean production was lowered to 4.31 billion bushels, down 1% from the previous forecast and down 3% from 2021. Trade was expecting an even to slightly higher bean production estimate.

November soybeans rallied sharply following the reports and returned all the way to the green line 20-day moving average, ending our soybean Buy Signal.

New crop wheat ending stocks were larger than trade expected. The USDA lowered the new crop US wheat carryout by 34 million bushels to 576 million bushels. Trade was expecting a 554 million bushel carryout.

Source: USDA, StoneX, Reuters

From the USDA reports:

Corn

Corn production for is forecast at 13.9 billion bushels, down less than 1% from the previous forecast and down 8% from 2021. Based on conditions as of October 1, yields are expected to average 171.9 bushels per harvested acre, down 0.6 bushel from the previous forecast and down 4.8 bushels from last year.

After a thorough review of all available data, acreage estimates are unchanged from last month. Total planted area, at 88.6 million acres, is unchanged from the previous estimate but down 5 percent from the previous year.

Area harvested for grain, forecast at 80.8 million acres, is unchanged from the previous forecast but down 5 percent from the previous year.

Soybeans

Soybean production for beans is forecast at 4.31 billion bushels, down 1% from the previous forecast and down 3% from 2021. Based on conditions as of October 1, yields are expected to average 49.8 bushels per acre, down 0.7 bushel from the previous forecast and down 1.9 bushels from 2021.

After a thorough review of all available data acreage estimates are unchanged from last month. Total planted area, at 87.5 million acres, is unchanged from the previous estimate but up less than 1 percent from the previous year.

Area harvested for beans in the United States is forecast at 86.6 million acres, unchanged from the previous forecast but up less than 1 percent from 2021.

Wheat

The outlook for 2022/23 U.S. wheat this month is for lower supplies, domestic use, exports, and stocks.

Supplies are reduced on lower 2022/23 production based on the NASS Small Grains Summary that indicated reductions in both harvested area and yield. This lowered production by 133 million bushels to 1,650 million, leaving production only minimally higher than last year.

Partially offsetting the production decline are higher projected imports, raised 10 million bushels to 120 million, all for Hard Red Spring. Annual feed and residual use is lowered 30 million bushels to 50 million, based on first quarter disappearance, as indicated in the NASS Grain Stocks report. This is the lowest first quarter total disappearance since 1983/84.

Wheat exports are lowered 50 million bushels to 775 million on reduced supplies, slow pace of export sales, and continued uncompetitive U.S. export prices. This would be the lowest U.S. wheat exports since 1971/72.

Projected ending stocks are lowered 34 million bushels to 576 million, which would be the lowest since 2007/08. The season-average farm price is raised $0.20 per bushel to $9.20 on reported NASS prices to date and expectations for futures and cash prices for the remainder of 2022/23.

September Quarterly Grain Stocks & Small Grains Summary

Corn stocks under the smallest trade estimate. Bean stocks larger than expected. Wheat exactly as expected.

Source: StoneX, Reuters

The smaller than expected corn stocks drove corn prices up through the 20-day moving average, with Friday’s high (at this writing) nearly reaching the September price peak. Technical traders will view today’s performance as a positive event as well as fundamental traders that have smaller beginning stocks for the crop year.

Corn prices have been in a relatively narrow trading range during the month of September and Friday’s report could give us the price thrust up to a Sell Signal.

Bigger supplies of soybeans to start the new crop year prevented beans from clearing the green line 20-day moving average Friday. Beans have been in a broad trading range since early August and next week, prices will be back down challenging support and adding days to our Buy Signal.  There is a gap left on the November bean chart at $13.50, which will likely be a downside target for technical traders.

The just finished wheat harvest was estimated to be smaller than the last USDA estimate and 128 million bushels smaller than traders expected. Prices surged up above the recent high and will likely give us Sell Signals early next week. On the next Sell Signal our advice will be to cover 30-60 days’ worth of cash needs.

Increased uncertainty in Ukraine and Russia has been positive to prices this week and will be closely watched next week.

From the USDA Grain Stocks report:

Old crop corn stocks in all positions on September 1, 2022 totaled 1.38 billion bushels, up 12 percent from September 1, 2021. Of the total stocks, 510 million bushels are stored on farms, up 29 percent from a year earlier. Off-farm stocks, at 867 million bushels, are up 3 percent from a year ago. The June - August 2022 indicated disappearance is 2.97 billion bushels, compared with 2.88 billion bushels during the same period last year.

Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports, and farm program administrative data, the 2021 corn for grain production is revised down 41.4 million bushels from the previous estimate. Corn silage production is revised down 888 thousand tons.

2021 planted area is revised to 93.3 million acres, and area harvested for grain is revised to 85.3 million acres. Area harvested for silage is revised to 6.45 million acres. The 2021 grain yield, at 176.7 bushels per acre, is down 0.3 bushel from the previous estimate. The 2021 silage yield, at 20.1 tons per acre, remains unchanged from the previous estimate. A table with 2021 acreage, yield, and production estimates by States is included on pages 17 and 18 of this report.

Old crop soybeans stored in all positions on September 1, 2022 totaled 274 million bushels, up 7 percent from September 1, 2021. Soybean stocks stored on farms totaled 62.9 million bushels, down 8 percent from a year ago. Off-farm stocks, at 211 million bushels, are up 12 percent from last September. Indicated disappearance for June - August 2022 totaled 698 million bushels, up 36 percent from the same period a year earlier.

Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports and crushings, and farm program administrative data, the 2021 soybean production is revised up 30.2 million bushels from the previous estimate. Planted area is unchanged at 87.2 million acres, but harvested area is revised to 86.3 million acres. The 2021 yield, at 51.7 bushels per acre, is up 0.3 bushel from the previous estimate. A table with 2021 acreage, yield, and production estimates by States is included on page 19 of this report.

Special Note

The marketing year for corn and soybeans is finished and a thorough review of the balance sheet was completed. This process, which is normal for this time of the year, led to revisions in acreage, yield, and production for the 2021 crop.

U.S. corn production for 2021 is revised down 41.4 million bushels and U.S. soybean production is revised up 30.2 million bushels from the previous estimate. All revisions can be found on pages 17-19.

All wheat stored in all positions on September 1, 2022 totaled 1.78 billion bushels, up less than 1 percent from a year ago. On-farm stocks are estimated at 591 million bushels, up 41 percent from last September. Off-farm stocks, at 1.18 billion bushels, are down 13 percent from a year ago. The June - August 2022 indicated disappearance is 543 million bushels, down 24 percent from the same period a year earlier.

September USDA Supply & Demand

USDA soybean yield estimate smaller than expected at 50.5 bpa

Soybeans

The surprise in the USDA numbers came in a lower than expected US soybean yield estimate. The USDA cut their US soybean yield estimate from 51.9 bpa in August to 50.5 bpa in this month’s report. This was smaller than the low end of the trade estimate range.

The USDA also cut the soybean harvested acreage estimate by 1% from last month, dropping it down to 86.6 million acres. This was 611,000 acres smaller than the average trade estimate.

The reduced bean yield and acreage numbers put the estimate for total soybean production at 4.378 billion bushels, which is 153 million bushels below the August report and 118 million bushels below the average trade estimate.

Crush (-20 million bushels) and export (-70 million) estimates were both reduced. Overall, this dropped the 2022-23 US soybean carryout to 200 million bushels, down from 245 million in August. The average trade estimate was for a slight increase in soybean carryout.

The tighter supply numbers sent bean prices higher immediately after the report release.

World soybean carryout was reduced by nearly 2.5 million tons, dropping the USDA estimate below the 100 million ton mark to 98.92 million tons.

Corn

The USDA had fewer changes for the corn market. They lowered their US corn yield estimate to 172.5 bpa, which was exactly equal to the average trade estimate, so there was no surprise for corn yield like there was for beans.

The USDA did lower their harvested acreage estimate for corn 1.3%, down to 80.8 million acres. This was 886,000 acres smaller than the average trade estimate.

The lower acreage estimate reduced the USDA corn production estimate by 415 million bushels to 13.944 billion bushels. This was 144 million bushels lower than the average trade estimate.

However, the corn carryout estimate was essentially equal to the average trade estimate at 1.219 billion bushels. The lower corn production estimate was offset by smaller feed  and residual use (-100 million bushels), exports (-100 million) and corn used for ethanol (-50 million).

The world corn carryout was reduced by 2.15 million tons to 304.53 million tons, which was larger than trade expected.

Wheat

The USDA left their US wheat carryout estimate unchanged from August at 610 million bushels. They increased their world carryout estimate by 1.23 million tons.

Source: USDA, StoneX, Reuters