August 2021 USDA Supply & Demand and Crop Production

USDA delivers bullish reports

As soon as the USDA numbers were released today, prices spiked higher. Nearly all crop production estimates and stocks tightened, and the USDA raised its price forecasts. Look for the Sell Signals in winter wheat to continue and new Sell Signals in Minneapolis wheat and corn tomorrow.

We believe you should use these upcoming Sell Signals on corn (and possibly beans) to get the inventory sold that you can’t store. Wheat producers continue to maintain 30-60 days’ cash flow needs.

Here is what the USDA said about the reports today:

OILSEEDS: U.S. soybean supply and use changes for 2021/22 include higher beginning stocks and lower production, crush, and exports. Beginning soybean stocks are raised on lower 2020/21 crush and exports.

Soybean production for 2021/22 is forecast at 4.34 billion bushels, down 66 million on lower yields. Harvested area is forecast at 86.7 million acres, unchanged from July. The first survey-based soybean yield forecast of 50.0 bushels per acre is reduced 0.8 bushels from last month. Traders expected the average yield to be down 0.4 bushels per acre.

Soybean supplies for 2020/21 are projected at 4.5 billion bushels, down 3 percent from last year. Soybean crush is reduced 20 million bushels on a lower domestic soybean meal disappearance forecast which is reduced in line with the prior year, and lower soybean meal exports. With soybean exports down 20 million bushels on lower supplies, ending stocks are forecast at 155 million bushels, unchanged from last month.

The U.S. season-average soybean price for 2021/22 is forecast at $13.70 per bushel, unchanged from last month. The soybean meal price is forecast at $385 per short ton, down 10 dollars. The soybean oil price forecast is unchanged at 65.0 cents per pound.

COARSE GRAINS: This month’s 2021/22 U.S. corn outlook is for lower supplies, reduced feed and residual use, increased food, seed, and industrial use, lower exports, and smaller ending stocks. Projected beginning stocks for 2021/22 are 35 million bushels higher based on a lower use forecast for 2020/21. Reduced exports are partially offset by greater corn used for ethanol, starch, and glucose and dextrose.

Corn production for 2021/22 is forecast at 14.8 billion WASDE-615-2 bushels, down 415 million from the July projection. The season’s first survey-based corn yield forecast, at 174.6 bushels per acre, is 4.9 bushels below last month’s trend-based projection. Traders expected a 1.9 bushel reduction.

Among the major producing states, today’s Crop Production report indicates that record-high yields are expected in Illinois, Indiana, and Ohio. In contrast, yields in Minnesota and South Dakota are forecast below a year ago.

Total U.S. corn use for 2021/22 is down 190 million bushels to 14.7 billion. Feed and residual use is down 100 million bushels based mostly on a smaller crop and higher expected prices. Corn used for glucose and dextrose and starch is projected higher based on observed use during 2020/21.

Exports for 2021/22 are lowered 100 million bushels to 2.4 billion. With supply falling more than use, ending stocks are down 190 million bushels to 1.2 billion. The season-average corn price received by producers is raised 15 cents to $5.75 per bushel.

WHEAT: The outlook for 2021/22 U.S. wheat this month is for reduced supplies, lower domestic use, unchanged exports, and decreased ending stocks.

The NASS Crop Production report forecast all wheat production at 1,697 million bushels, down 49 million from the previous forecast. Most of the reduction is in Hard Red Winter and Soft White Winter. The all wheat yield is forecast at 44.5 bushels per acre, down 1.3 bushels from the previous forecast.

Feed and residual use is lowered 10 million bushels to 160 million on reduced supplies. Food use for both 2020/21 and 2021/22 is reduced slightly, based primarily on the latest NASS Flour Milling Products report.

Wheat exports are unchanged but there are offsetting by-class export changes for several classes. Projected 2021/22 ending stocks are reduced 38 million bushels to 627 million and are 26 percent below last year. The projected 2021/22 season-average farm price is raised $0.10 per bushel to $6.70.

Source: USDA, StoneX, Reuters

July 2021 USDA Supply & Demand and Crop Production

July USDA Supply & Demand and Crop Production: The biggest USDA surprise is smaller wheat carry out. 

Notice the corn and bean yield estimates released today are unchanged from June.

US wheat production came in at 1.746 billion bushels, down 152 million bushels from last month. U.S. winter wheat production was increased by 55 million bushels, while the initial spring wheat estimate was 114 million bushels lower than the average trade estimate.  

The 2020-21 carryout in corn was reduced 25 million bushels from the last report, while beans were left unchanged. 2021-22 carryout was increased for corn by 75 million bushels. Soybeans were left unchanged. Wheat carryover was reduced by 105 million bushels.

Bullish traders will be disappointed that the USDA did not give us a substantially tightened supply. But as you can see from the ending stocks graphs below, U.S. supplies are still relatively tight, with little room for new business.

Our Buy Signals in corn and winter wheat have proven to be timely.

Source: USDA, StoneX, Reuters

The USDA estimates the spring wheat yield at 30.7 bushels per acre, down 36.8% from last year.

Source: USDA

June 2021 USDA Quarterly Grain Stocks and Acreage

Farmers didn’t plant as many acres as traders wanted. Stocks slightly smaller than expected.

We knew last fall that South America had to raise a bumper crop and that big crop needed to be followed by a U.S. bumper crop. South America did good on raising a record crop of soybeans, but their second crop corn continues to struggle and lose yield.

U.S. farmers needed to make up for some of the world’s short supply by increasing acreage. The USDA told us in March that farmers were not planning on a big enough acreage increase. Today, the USDA confirmed that farmers did not plant as many acres as traders hoped they would.

Now the market’s job is to continue to slow demand and adequately adjust for potential U.S. yield shortfalls. The market also needs to guard against potential U.S. weather worries, such as the drought in the western and northern Corn Belts and excess moisture in central and southern regions.

This once again puts pressure on South America to strive to raise a record large crop next year.

June 2021 USDA Supply & Demand and Crop Production

June 2021 USDA Supply & Demand and Crop Production: Corn supplies tightened, beans did not

The USDA gave the most positive numbers to the corn market in the WASDE report released Thursday. The old crop corn left in the bin is expected to be 75 million bushels less due to exports and another 75 million bushels smaller due to ethanol. The 150 million bushel cut in the old crop stocks estimate cut the beginning stocks for the new year.

The USDA did not change corn acreage or yield estimates for the crop growing in the field. There were no changes in the new crop corn demand estimates. Corn ending stocks for the 2021-22 crop year are expected to total 1.357 billion bushels.

South American corn production was reduced 3.5 million tons to 98.5 million tons, one million tons more than the average trade estimate. Brazilian soybean production is increased 1 million tons from last month. The trade did not expect that number to change. No changes were made to Argentine production estimates.

World corn carryout fell by 2.9 million tons, nearly all due to the lower Brazilian crop. The trade estimate was right in line with the USDA forecast.

U.S. soybean carryover of old crop in the bin was increased 15 million bushels due to reduced crush forecast for 2020-21. New crop U.S. bean production in the field was left unchanged. The carryover for 2021-22 was increased by the same 15 million bushels found in the bin.

World old crop stocks for soybeans were increased 1.45 million tons and the world soybeans for 2021-22 were increased by that same amount.

The U.S. wheat production estimate was increased to 1.898 billion bushels, up 26 million bushels compared to last month, which was almost exactly what the trade expected.

U.S. wheat supplies were raised as higher production more than offset reduced beginning stocks. Increased hard red winter and soft red winter production more than offset the lower white wheat production. The all wheat yield is 50.7 bushels per acre, up 0.7 bushels from last month.

Old crop world wheat stocks were down a little more than a million tons. New crop world wheat stocks were increased by almost 2 million tons.

There were not enough changes in the USDA report to change our opinion about selling on this round of Sell Signals. We are happy to get the extra surge higher in corn today and hope bean prices and wheat prices will give us an opportunity at a Sell Signal next week.

Source: USDA, Reuters, StoneX

May 2021 USDA Supply & Demand and Crop Production

May 2021 USDA Supply & Demand and Crop Production: Old crop wheat and new crop corn stocks were both bigger than expected.

Following the USDA reports today, wheat prices immediately slid lower. The corn market traded lower for a little bit but quickly began to recover. The bean market immediately recovered some small losses following the report.

As you can see from the following table, wheat was the only crop that had a bigger carryout estimate for 2020-21 compared to trade estimates and last month’s estimates. The USDA old crop corn carryout estimate was slightly smaller than trade expected, while beans were right on target.

For the first estimate of the 2021-22 new crop year, corn ending stocks at 1.507 billion bushels were larger than traders expected. New crop wheat carryout was also bigger than expected with beans right where the traders thought.

The USDA barely changed 2021-21 world ending stocks for corn, beans, and wheat from their April estimates. That left today’s USDA world corn number considerably larger than traders expected. Beans and wheat were close to what was expected.

For next year, the USDA gave us a considerably bigger world ending stocks estimate for corn than traders expected. The USDA world bean number was about 3 million tons larger than expected and wheat was right on the money.

Brazilian corn production was reduced 7 million tons from last month, about 1 million tons less than traders expected. None of the other South American production numbers changed much.

USDA raised U.S. 2021-22 winter wheat production by 46 million tons compared to last month. The current estimate came in right where traders expected, but wheat prices were pressured as soon as the report came out.

Source: USDA, Reuters, StoneX

April 2021 USDA Supply & Demand and Crop Production

April 2021 USDA Wasde and Crop Production: U.S. corn stocks smaller than expected

The USDA released their April WASDE report today, pegging U.S. corn stocks at 1.325 billion bushels, down from 1.502 billion last month. The average trade estimate had corn stocks 44 million bushels larger.

U.S. bean and wheat stocks came in almost exactly where the trade expected.

World corn and wheat stocks were each down nearly 4 million tons from their March estimates. This drawdown of world feed supplies surprised traders, who expected 1 million more tons of corn and six million tons of wheat. 

Get ready for Sell Signals in corn and wheat next week.

World bean stocks surprised traders the other way. Ending world bean stocks are estimated to be 86.87 million tons, over 3 million tons from last month and the average trade estimate.

Today’s report did not tighten world bean supplies, which will be disappointing to the bulls. Meanwhile, world corn and wheat farmers have fewer bushels expected to be left over at the end of this season.

Notice all the South American crop production estimates, especially beans are bigger than traders expected.

Source: USDA, StoneX, Reuters

Below are the USDA supply demand tables for corn, beans, and wheat. Bean exports were boosted 30 million bushels, while every category of usage increased in corn compared to last month’s estimate.  Click here to see the full WASDE report.

Source: USDA, StoneX, Reuters

March 2021 USDA Quarterly Grain Stocks and Prospective Plantings

Farmers tell USDA, “We are not planting as many corn and bean acres as traders expected.”

The quarterly stocks were slightly smaller than expected for corn and slightly larger on beans and wheat. No surprises in the Stocks report.

Source: USDA, Reuters, StoneX

Although corn acres are up less than 0.5%, four out of the top five states cut corn acres.

Farmers decided to plant 5.4% more soybeans nationally and increased acres in each of the top five bean states.

The surprise came in the wheat complex, where acreage was up 3.4% from the last estimate and a whopping 8.8% from last year.

The bullishness in today’s reports is a little surprising, since acreage can certainly increase between now and the June report. By boosting the prices, traders will encourage the additional corn and bean acres the marketplace wants.

How about the Buy Signals on soybeans, meal, and wheat this morning?

Our strategy is to make an increment of sales on the next Sell Signal, which should be just around the corner.

Source: All Slides from the USDA Executive Summary

For full USDA reports, click on links below.

Grain Stocks Prospective Plantings

Prospective Plantings

Grain Stocks

March 2021 USDA Supply & Demand

USDA leaves U.S. numbers mostly unchanged and tightened world wheat numbers slightly

Traders’ initial reaction to USDA numbers put pressure on corn and beans but boosted wheat prices. As you can see from the tables below, U.S. carryover numbers were unchanged from last month.

World corn and bean carryover numbers were just slightly changed. World wheat carryover declined by 3 million tons.

South American crops were little changed. Brazilian bean production was increased by 1 million tons.

Source: USDA, Reuters, StoneX

February 2021 USDA Supply & Demand

The USDA disappointed bullish traders with conservative usage and carryover estimates.

The USDA corn demand estimates might have surprised traders the most. After seeing big business to China in corn and ethanol, traders had allowed their demand ideas to expand beyond the amounts the USDA was comfortable with.

USDA left U.S. ethanol production unchanged, raised corn exports by a measly 50 million bushels, and lowered U.S. corn ending stocks by 50 million bushels, compared to the 160 million bushel reduction traders were expecting. Corn reacted by trading down 10 cents.

U.S. bean carryover was reduced to 120 million bushels compared to the average trade guess of 123 million bushels. There were little changes in U.S. bean usage. U.S. bean exports were increased by 20 million bushels. South American bean and corn production numbers were left unchanged.

All wheat supply demand numbers were left unchanged from last month.

When the smoke cleared traders were left with disappointing U.S. numbers heading into the South American harvest.

Source: USDA, Reuters, StoneX

January 2021 USDA Supply & Demand, Grain Stocks, and Winter Wheat Seedings

January 2021 USDA Supply & Demand, Grain Stocks, and Winter Wheat Seedings: USDA tightens stocks

The USDA reduced nearly all U.S. numbers below the average trade estimate. Supplies are smaller than traders thought, and markets surged.

The biggest surprise in today’s estimates came in the corn market. The USDA reduced the U.S. 2020 corn yield by 3.8 bushels from their December estimate, taking it down 3.3 bushels from the average trade estimate. U.S. corn production was pegged at 14.182 billion bushels, down from 14.507 billion bushels in December.

U.S. corn carryout was cut 150 million bushels, down to 1.552 billion bushels.

The USDA also reduced the U.S. bean yield by 0.5 bushel/acre down to 50.2 bushels per acre, 0.3 bushels below trade estimates. That pulled U.S. bean production down 35 million bushels from the December estimate and 23 million below trade estimates.

The USDA pegged U.S. soybean carryout at 140 million bushels down from the December estimate of 175 million bushels. This was one of a few estimates that were bigger than the trade expected, their guesses averaged 139 million bushels.

U.S. wheat carryout for the 2020-21 crop was reduced to 836 million bushels, down 26 million bushels from December and 23 million from the average trade guess.

Source: USDA, Reuters, StoneX

In Brazil, the USDA’s production estimates were larger than trade expectations. Brazilian corn production estimate was only cut by 1 million tons to 109 million tons, compared to a trade expectation of 107.7 million tons.

The USDA Brazilian bean production estimate was unchanged from December at 133 million tons, compared to a trade expectation of 131.4 million tons.

The USDA Argentine production estimates were lowered from December, but more in line with the trade estimates than the Brazil numbers.

Source: USDA, Reuters, StoneX

U.S. winter wheat seedings were 5% bigger than last year, totaling 31.99 million acres. That was less than a half a million acres larger than trade expected.

Source: USDA, Reuters, StoneX

As you can see in the table below corn stocks are down sharply from trader expectations and are about the same as last year. Bean stocks are slightly larger and wheat stocks are also down 20 million bushels.

Source: USDA, Reuters, StoneX