July USDA Supply & Demand

USDA numbers slightly larger than expected

All the key USDA numbers from today’s reports were in line with the average trade estimate. However, each estimate, except for Brazilian corn, was slightly larger than trade expected. But none of the larger estimates were big enough to allow for production cuts due to weather.

Soybean new crop ending stocks fell 50 million bushels to 230 million bushels, due to the June 30 smaller acreage estimate. The number was still 19 million above trade expectations.

The USDA did not change their corn or bean yield estimates this month.

The only change the USDA made to their South American production estimates was in Argentine soybeans, where they increased their estimate slightly.

There was nothing in the reports to excite traders. Markets have been unable to get up to the green line 20-day moving average this week. This promises to bring more technical selling.

June Acreage & Quarterly Grain Stocks

USDA Surprises Traders with Fewer Bean Plantings

The U.S. corn acreage was 40,000 acres less than expected, about half a million acres larger than the March intentions, but about 3.5 million acres smaller than last year’s final number.

Beans had the most surprising number, coming in 2.1 million acres below expectations and 2.6 million acres below the March estimate. However, today’s bean planting estimate was still 1.1 million acres larger than last year’s final number.

Wheat plantings were 75,000 acres larger than trade expected and 259,000 acres smaller than the March estimate, but 389,000 acres larger than last year’s final number.

U.S. corn stocks were almost exactly what the trade expected and totaled 235 million bushels larger than last year at this time.

Bean stocks were 5 million bushels larger than the trade expected and totaled 202 million bushels larger than last year.

Wheat stocks were 5 million bushels larger than trade expectations and down 185 million bushels from last year.

Markets will continue their focus on weather, with increased importance for beans.

Source: USDA, Reuters

June USDA Supply & Demand

USDA reports mostly unchanged from last month

Small adjustments in U.S. beginning stocks numbers (-30 million bushels for beans; +45 million bushels for corn) were the biggest changes seen on USDA reports Friday. U.S. corn and soybean acreage and yield estimates were left unchanged from last month. Usage changes were insignificant.

U.S. wheat yield was increased 0.3 bpa to 46.9 bpa, which increased production by 8 million bushels. U.S. wheat ending stocks increased by the same 8 million bushels.

Global wheat stocks were reduced less than a million tons, while bean stocks were increased nearly a million tons, and corn stocks increased 5 million tons from last months report.

Although the corn numbers were larger than traders expected, corn prices didn’t take long to recover losses and move higher on the day.

The USDA left Ukraine’s 2022-23 supply demand table for wheat unchanged from last month. They increased Ukraine’s 2022-23 corn production by 5.5 million metric tons and left exports unchanged at 9 million tons (23 million last year).

The USDA made small increases to their South American soybean production estimates but left their corn production estimates unchanged.

Traders did not get any significant number change in the fundamentals. Weather forecasts are signaling the potential for hot dry conditions over the next two weeks, which is much more important to traders than Friday’s USDA report.

Source: USDA, StoneX, Reuters

May USDA Supply & Demand

The highly anticipated May USDA supply demand estimates contained a couple of surprises. First both old and new crop U.S. wheat carryout was smaller than trade expected. Second, the first USDA 2022-23 yield estimate was pegged at 177.0 bushels per acre, which was 4.0 bpa below the adjusted trend yield estimate in the February USDA Ag Outlook Forum.  See the U.S. supply demand tables below.

The rest of the key U.S. numbers were not far from trade estimates. Both old and new corn carryout were larger than expected. Despite the lower than expected 2022-23 corn yield, carryout increased on a 2.5% cut to domestic use and exports.

The 2022-23 outlook for U.S. soybeans is for higher supplies, crush, exports, and ending stocks compared with 2021-22. The outlook for 2022/23 U.S. wheat is for reduced supplies, exports, domestic use stocks, and higher prices.

The 2022-23 world carryout for corn and soybeans were larger than expected, while world wheat carryout was smaller than expected.

In South America, the USDA left their April estimates for Brazilian corn and bean production unchanged while they lowered their Argentine corn estimate by 1.5 million tons and left Argentine bean production unchanged.

April USDA Supply & Demand

US corn and wheat ending stocks larger than expected, while soybeans a bit lower

The USDA kept U.S. corn carryout unchanged from their March report, instead of lowering it slightly as the trade expected. Global corn carryout was increased 5 million tons, while trade expected no change.

U.S. soybean carryout was lowered 25 million bushels from March on reduced exports. This was largely in line with trade expectations. Global soybean carryout was not reduced as much as trade expected.

U.S. wheat carryout was increased 25 million bushels on reduced usage, which was a larger increase than trade expected.

The USDA increased their Brazilian corn production estimate nearly a million tons more than expected, while decreasing their Brazilian soybean production estimate slightly more than expected. The USDA left their Argentina production estimates unchanged, while trade expected declines.

Source: Reuters, USDA, StoneX

USDA Summary

Corn

This month’s 2021/22 U.S. corn outlook is for offsetting changes to feed and residual use and corn used for ethanol production, with unchanged ending stocks. Feed and residual use is lowered 25 million bushels, corn used to produce ethanol is raised 25 million bushels.

With offsetting use changes, ending stocks are unchanged at 1.440 billion bushels. The season-average farm price is raised 15 cents to $5.80 per bushel based on observed prices to date.

Global coarse grain production for 2021/22 is forecast 2.7 million tons higher to 1,501.6 million. This month’s 2021/22 foreign coarse grain outlook is for higher production, reduced trade, and larger ending stocks relative to last month.

Soybeans

The USDA increased U.S. exports 25 million which lowered ending stocks by the same amount. The season-average soybean price forecast is unchanged this month at $13.25 per bushel. Soybean meal prices are also unchanged at $420 per short ton. The soybean oil price is projected at 70.0 cents per pound, up 2 cents.

The 2021/22 global soybean supply and demand forecasts include lower production, crush, trade, and ending stocks. Global soybean production is reduced 3.1 million tons to 350.7 million on lower crops for Brazil and Paraguay. Global soybean stocks are lowered 0.4 million tons to 89.6 million mainly on lower U.S. and Argentine stocks.

Wheat

The outlook for 2021/22 U.S. wheat this month is for stable supplies, lower domestic use, reduced exports, and higher ending stocks. Annual feed and residual use is lowered 10 million bushels to 100 million. Exports are lowered 15 million bushels to 785 million as the U.S. remains uncompetitive to most markets and exports would be the lowest since 2015/16. Projected 2021/22 ending stocks are raised 25 million bushels to 678 million.

The global wheat outlook for 2021/22 is for slightly higher supplies, increased consumption, lower trade, and reduced ending stocks.

Projected 2021/22 global trade is lowered 3.0 million tons to 200.1 million as lower exports by the EU, Ukraine, the United States, and Kazakhstan are not completely offset by higher exports by Russia, Brazil, and Argentina.

The majority of Ukraine’s exports have already been shipped with limited additional amounts expected for the remainder of 2021/22. Projected 2021/22 world ending stocks are lowered 3.1 million tons to 278.4 million, a 5-year low.

March 2022 USDA Quarterly Grain Stocks & Prospective Plantings

USDA Stocks and plantings positive to wheat, Plantings positive to corn, negative to beans

The USDA Quarterly Stocks report was not far off trade expectations for any of the crops. Corn and wheat stocks were both slightly lower, while bean stocks were slightly higher than the average trade guess.

The biggest surprise came in Prospective Plantings. Farmers indicated they would plant 89.4 million acres of corn, 2.5 million acres less than traders thought. Farmers indicated 2.2 million more acres soybeans instead.

After the aggressive market shakeout this week, the USDA report was released with many traders chased to the sidelines. Corn and wheat prices shot higher following the report, with July and December corn posting new life of contract highs.

Bean prices initially fell following the reports but so far have held well above the low of this week’s range.

Wheat prices surged higher and ended our Buy Signal in Chicago wheat. Wheat prices are still trading under the green line 20-day moving average, which is the next target for this upside move.

The December corn acreage was reported 210,000 acres below the lowest trade estimate. Corn prices got a shot in the arm from that number. Weather becomes more important with these smaller acres.

Other than corn acreage, there wasn’t much in the numbers today (at first blush) to push prices very far outside of their recent trading ranges.

Source: USDA, Reuters, StoneX

March USDA Supply & Demand

The USDA did not offer any surprises today. Grain usage estimates were in line with traders’ expectations.

In South America, the Argentine corn and bean crops were right in line with what trade expected. In Brazil, the soybean crop was 2 million tons smaller and corn crop 1 million ton larger than the average trade forecast. Most traders think the USDA will reduce the Brazilian bean crop further in subsequent reports.

Source: USDA, StoneX, Bloomberg

The USDA report did not take traders’ attention away from Russia’s invasion of Ukraine.  News reports Wednesday indicate more intense negotiations for a settlement were being facilitated by Israel.

Facing an onslaught of Russian destruction alone, Ukraine is being encouraged to negotiate a settlement. Commodity traders are betting that will occur, as of this writing. It is not too late to plant a crop there, and crop prices are reacting accordingly.  

They may see the Ukraine situation differently tomorrow.

Source: USDA, StoneX

February USDA Supply & Demand

USDA reports in line with pre-report estimates. No Surprises

As you look at the table of numbers below, you will notice the biggest change came in Brazilian soybeans, which were cut 5 million tons from last month’s estimate, but still came right in the middle of what traders expected.

The USDA expects a few more bushels of crop carryout, both in the world and U.S., but not enough of a difference to move prices.

This is about the most neutral report we have seen in a while.

Traders want to be bullish, thinking the combination of further South American crop losses, strong demand, and rampant inflation are all working in their favor. Spec funds are building bigger long positions in corn and beans and bailing out of short wheat.

U.S. equity major indexes cleared the green line 20-day moving average yesterday and are posting additional gains today.

Source: USDA, StoneX, Reuters

January USDA Supply & Demand

USDA report numbers positive, price action not so much

The U.S. corn and bean crops were increased slightly, and winter wheat plantings were also slightly larger than traders expected.

U.S. carryout for corn, wheat, and beans were also slightly larger than trade estimates.

South American crops were slightly smaller than traders expected and world carryout for beans was 4.7 million tons below the average trade guess; world corn carryout was down 1 million tons from guesses, while world wheat carryout was 0.7 million tons larger.

Taking the numbers at face value, one would expect prices across all the crop markets to be higher. But only beans have been able to maintain strength with wheat double digits lower. Corn has been mostly lower since the reports were released.

Beans should go higher, and corn should follow along, but the weakness in wheat is disconcerting. We have learned to be cautious in corn and beans this year when the wheat market is falling.

The sharply lower trade in beans is also baffling and we don’t like corn breaking below the green line 20-day moving average. Color us cautious but we don’t like it when positive reports give negative price action and that is where we are at the moment.

Hopefully the picture will be clearer as we move toward today’s close. 

Source: USDA, StoneX, Reuters

December 2021 Supply & Demand and Crop Production

Very small changes in December USDA estimates

The USDA did not change any U.S. or South American production numbers in their December update. Small changes to usage increased wheat stocks by 16 million bushels and were slightly larger than the average trade estimate.

Corn and bean ending stocks were unchanged from the November estimates, with corn being slightly larger than trade expected and beans slightly smaller.

In the world, ending stocks were increased a little over a million tons for corn and decreased by 1.7 million tons for soybeans. World wheat stocks were raised by 2.38 million tons.

Weakness in wheat prices is worrisome and have slid prices below the November wheat for March Chicago wheat and are threatening to do that for March Kansas City wheat. The bullish wheat fundamentals appear to be fully adjusted into the price and a downward trend has begun. This is worrisome, since spec funds were holding sizable net long positions on the latest CFTC report.

Corn and bean prices have retreated down to the green line.

Source: USDA, StoneX, Reuters

USDA summary comments:

Corn

This month’s 2021/22 U.S. corn supply and use outlook is unchanged from last month. The projected season-average farm price remains at $5.45 per bushel. Global coarse grain production for 2021/22 is forecast 2.7 million tons higher to 1,501.7 million. The foreign coarse grain outlook is for greater production, increased trade, and larger ending stocks relative to last month.

Oilseeds

Total U.S. oilseed production for 2021/22 is forecast at 130.3 million tons, up slightly due to an increase for cottonseed. Soybean supply and use projections for 2021/22 are unchanged from last month. Although soybean crush is unchanged, soybean oil production is raised on a higher extraction rate.

The U.S. season-average soybean and soybean oil price forecasts for 2021/22 are unchanged at $12.10 per bushel and 65.0 cents per pound, respectively. The soybean meal price forecast is increased $5.00 to $330.00 per short ton.

The 2021/22 global oilseed supply and demand forecasts include lower production and lower ending stocks compared to last month. Global oilseed production is projected at 627.6 million tons, down 0.4 million from last month mainly driven by lower soybean production.

Wheat

The outlook for 2021/22 U.S. wheat this month is for slightly lower supplies, unchanged domestic use, reduced exports, and higher ending stocks. Supplies are lowered, on decreased imports with a weaker-than-expected pace for Hard Red Spring (HRS).

Exports are lowered 20 million bushels to 840 million on slowing export sales and shipments with equivalent reductions for Hard Red Winter and HRS. Additionally, U.S. export prices are expected to remain elevated the rest of 2021/22, further diminishing U.S. competitiveness.

Projected 2021/22 ending stocks are raised 15 million bushels to 598 million but are still 29 percent lower than last year. The projected season-average farm price (SAFP) is raised $0.15 per bushel to $7.05 on NASS prices reported to date and expectations for cash and futures prices for the remainder of 2021/22. This would be the highest SAFP since 2012/13.

The global wheat outlook for 2021/22 is for higher supplies, greater consumption, increased trade, and higher ending stocks. Supplies are projected rising by 4.3 million tons to 1,067.5 million, primarily on the combination of increased beginning stocks for Australia and the EU and upward production revisions for Australia, Russia, and Canada.

Projected 2021/22 world consumption is raised 1.9 million tons to 789.4 million on higher feed and residual use more than offsetting lower food, seed, and industrial use.