USDA issued four separate reports today. The Annual Production Summary revised the prior view of the 2023 fall US corn and soybean harvest. The quarterly Grain Stocks report released a count of old crop as of December 1. For corn and soybeans this represents old crop after one quarter of usage. For wheat it is a midyear old crop count. The third report is theroutine monthly World Agricultural Supply Demand Estimates. This shows thebalance sheets with new production and demand numbers and changes for their endingstock view. This report also shows world numbers. The fourth report is theannual Winter Wheat & Canola Seedings. This is USDA’s first new crop report.It covers a survey of producers for fall winter wheat plantings.
Corn: The market looked for one message from USDA on corn in today’s series of reports. “Is there anything here which disrupts the narrative of heavy US supplies”? The answer they received was that heavy US supplies just got moderately worse. USDA’s prior 2023 corn production estimate was raised by 108million bushels today to now 15.342 billion. The trade estimate was for a minimal decline to 15.226 (ALDL 15.203). We already had a record US production in 2023. It was moderately increased. Yields were jumped 1.4% on this report, from 174.9 bpa last month to 177.3. This is now a new record yield, now exceeding the 2021 peak of 176.7. This 1.4% increase from the November yield estimate is tied for the second largest jump of the past 20 years. A light offset was the -0.6 million acre revision for harvested acreage, now 86.5.
Old crop stocks left over as ofDecember 1 were showed at 12.169 billion bushels, lightly over the 12.050 tradeestimate. Considering the higher production change than the private trade, thisis within reason.
When including a minimal change tothe long completed 2022/23 year, the 2023/24 US balance sheet started out with106 million more bushels than last month. USDA offset this partially, +25million bushels for feed/residual and +50 for corn for ethanol. The recent,surprising, strength in ethanol production over the prior four weeks makes thismove within reason. Exports were the area most of the trade was monitoring onthis report. USDA chose not to make any changes from last month which may be awarning. US corn export sales are great. To meet their prior whole-year goalremaining sales only need to run even with the five year average. The past 15weeks were quite strong at +26%. These changes helped push the US ending stock estimate up by 31 million bushels to 2.162 billion. The trade estimate was2.105 (ALDL 2.075). The problem with corn is this long and slow downtrend hasstill to price in 1.9, 2.0 or even 2.1 billion bushels. Here we are now at2.162. All of these stock numbers imply sub-$4.10 futures. Allendale’s currentconservative downside estimate is $4.30. This downside estimate is likely a bit too conservative. Bottom line for today, there is no change in the well-supplied US corn story.
World corn ending stocks were raised by a stout 10 million tonnes today, now 325.22. This was a China story with USDA’s prior 277.0 mt production estimate jumped to 288.8. They are now inline with the Chinese government’s 288.8 view. Brazil’s crop was lowered by 2 mt today, now 127.0. This was shot of the trade estimate’s view of a decline to 125.2(ALDL 128.0). They left Argentina’s 55 mt crop view unchanged from last month. The Rosario Grains Exchange this week raised theirs to 56.
Soybeans:
2023/24: 2023 soybean production was increased on today’s report by 36 million bushels, now 4.165. The trade expectation was for a minimal decline to 4.134(ALDL 4.118). Soybeans, different than corn, don’t have a record production. This is still the smallest production in four years and smallest total supply in eight years (beginning stocks). Yields were revised from 49.9 bpa to 50.6.That may not sound like much but this 1.4% increase is tied for the second largest increase in January in 20 years. There was a light offset from -0.4million acres off their harvested estimate.
The December 1 count of old crop soybeans found 3.000 billion bushels. Given the higher production than the trade was looking for their 2.975 pre-report estimate was reasonable (ALDL2.956).
When including a minor change to beginning stocks from the long completed 2022/23 crop year, USDA started this month’s balance sheet with 31 million more bushels than last month. The bigger surprise was their lack of interest in adjusting demand by any real amount. Residual use was lowered by 3 million. The easiest call to make was that domestic crush should have been increased. Production over the Sep – Nov period was 4.0% over last year. USDA’s current, unchanged, goal for the whole-year isa 4.0% increase. Given more plants coming online in the coming months this category is likely 10 to 20 million bushels too low. Additional support comes for this view with Tuesday’s NOPA crush estimate for December suggesting a 9%increase over last year. Exports are the hotly debated subject for soybeans. Based only on sales, USDA would be viewed as too low. Remaining year sales could fall to -18% from the five year average to meet USDA’s current view. The prior 13weeks, though with big week to week gyrations, averaged 24% over last year. But the export story is not clean-cut. Shipments over the past 9 weeks have been terrible, -29% from average. To meet USDA’s whole-year goal this must run at least -8%. Additionally, the US price disadvantage to Brazil remains. USDA chose to leave their estimate unchanged. With a moderate supply increase and a minor demand decline USDA’s ending stock view was raised by 35 million bushels to 280. The trade estimate was 243 (ALDL 232). We compute a 250 stock as implying futures at $12.95 and 300 at $12.20. In our view, soybeans are now at economic value. We will note there is still considerable movement still ahead on this balance sheet.
World ending stocks were minimally increased on today’s report, 0.4 million tonnes to 114.6. USDA raised the small Chinese crop by 0.3 mt on today’s report to 20.8. The Chinese government is at 20.8.Brazilian production was lowered by 4 to now 157. The trade estimate was 156.0(ALDL 156.5 personal, 158.5 expected for USDA). The Argentine soybean production view was raised by 2 mt to now 50.0. The Rosario Grains Exchange this week upped their view to 52. The US ag attache is up to 50.5.
Wheat:
2023/24: As usual, there were no changes to the 2023 US wheat harvest. The last time they did that in January was 2007. The December 1 count of old crop was found to be 1.410 billion. This represents old crop left over after six months of usage. This was just over the 1.387 trades estimate (ALDL 1.386).
USDA’s 2023/24 balance sheet started off with 12 million fewer bushels than it did last month. USDA revised the long completed 2022/23crop year. On the demand side only a 1 million bushel decline was noted for seed usage. No changes were made to their prior 970 whole-year export view. You could argue this category should have been raised. To meet this view the remainder of the year can see future sales fall to -35% from the five year average pace. The prior 24 weeks of sales were active at +2% vs. average. Ending stocks, what will be left over at the end of the marketing year on May31, were lowered from 659 to 648 million. US wheat prices are not traded with the US balance sheet.
World wheat ending stocks were lowered from 258.2 million tonnes to 260.0. Russian production was raised by 1 mt to 91. Ukraine was upped by 0.9 to 23.4.
The first new crop report of the year was released by USDA today. Fall 2023 winter wheat plantings, for the summer 2024 harvest, were estimated at only 34.425 million acres. This 2.2 million decline was under the35.786 trade estimate (ALDL 37.287). Declines were noted for hard red at -1.7,soft red -0.5 and white -0.1.
