Market Movers: USDA Report Day

Market Movers: USDA Report Day


The June supply/demand includes both changes to old crop numbers for grains as well as minor updates to USDA’s first new crop numbers that started last month. Though USDA can change new crop acreage and yields they are generally resistant to on this report. 



2022/23: Old crop US corn ending stocks were raised from 1.417 billion bushels to 1.452 on this report. The trade expectation was 1.449 (ALDL 1.487). Exports were lowered by 50 million bushels. This is consistent with well-known challenges in place for several months. This month’s export revision is the sixth decline since the September supply/demand report. Revisions since the September report now total 550 million. We would suggest further declines will be made in the coming months. The prior eight weeks of sales were -80% from the five year average pace and Brazil’s price discount totals $37 per tonne, 94 cents per bushel. Imports were lowered by 15. There were no changes to their whole-year corn for ethanol estimate in this report. We do expect a moderate decline in the coming months. September – April usage totaled 3.400 billion bushels, -4.4% from our 2018/19 model year. To hit USDA’s 5.250 billion goal the remaining months need to run 1.850 billion. This would take an increase over that model year’s use, +1.6%. There was no change for feed/residual. That is common as the coming June 30 Grain Stocks report will show implied miscellaneous demand for the prior March – May period. Feed/residual will be adjusted on the July supply/demand report. Old crop stocks of 1.400 would suggest 585 for futures. 1.450 would suggest 540. 


The 2 million decline for Argentina’s crop estimate lowered USDA to now 35 million tonnes. The estimate for Brazil was raised by 2 to now 132 mt. That comes on top of last month’s 5 million increase. 


2023/24: There were no changes to acreage, planted or harvested, and there was no change to USDA’s 181.5 bpa trend yield. Changes in yields in May or June are generally tied to planting, of which there has been no real problem. There have only been five yield adjustments in June over the past 25 years. It may surprise you to learn they have only adjusted corn yields four times of the past 25 years on the coming July report. At this point, we would expect a minor yield decline to show on this year’s July report than a more realistic one for August. As a reminder, moisture in May and first half June are not determinants of final yields. Yield hits are statistically tied specifically to weather around reproduction. The key is If current dryness continues into July. With no changes to supply or demand, the 15 million bushel old crop stock increase was reflected on new crop, now 2.257 billion. Whether it is a stock of 1.8 or up to 2.2 does not matter, the implied pricing for December futures at fall lows is anywhere from 380 – 440. While we expect higher prices ahead, it will have to be made on significant changes to yield perception. A 5% cut from trend to 172.4 bpa returns a 2.0 stock. If we see a summer “perception” of a yield decline of 10.6%, 162.3 bpa, you can argue for 1.4 billion in stocks and a 585 price. 



2022/23: Old crop US soybean ending stocks were raised by 15 million bushels to now 230. The trade estimate was 223 (ALDL 255). The only change today was a 15 million decrease for exports. We expect further declines still ahead in the coming months. The past 18 weeks have seen sales -62% from the five year average. Given Brazil’s $60 per tonne discount to the US, $1.76 per bushel, we are not optimistic for any improvement. On this report USDA chose to hold back from any domestic crush adjustments. September – April use of 1.494 billion is +0.1% from one year ago. To hit USDA’s 2.220 whole-year estimate the remaining months need to improve to +2.0% from last year at 726 million. That should be easy given the most two recent months were +2.6% and +3.3%. A stock of 200 would suggest prices of 1400 for old crop futures, 250 would imply 1295. 


USDA lowered their Argentine production estimate by 2 million tonnes, now at 25. Brazil’s estimate was raised by 1 to 156. 


2023/24: New crop stocks were raised by 15 million to now 350 due to the old crop changes. There were no changes to USDA’s acreage or trend yield 52.0 bpa estimates from last month. USDA has never changed soybean yields in June. USDA may hold back from yield fireworks next month as well. They only changed them two times in the past 25 years in July. There were no changes to new crop demand. The pricing side is interesting here with a 300 stock implying around 1220 for November futures fall lows. 350 would suggest a price of 1165. 400 would return 1130. We will state clearly that the recent price decline for soybeans at one point fully priced in trend yields. Any declines from trend immediately go to higher prices, unlike corn. A “perception” this summer of 7.6% yield deviation, 48.0 bpa, would bring prices just under 1400. 



2022/23: USDA chose to leave their old crop wheat ending stock unchanged on this report at 598 million bushels. The trade estimate was 606 (ALDL 622). There is a well-known export shipment problem. The old crop marketing year ended on May 31 with weekly Foreign Agricultural Service shipments totaling 653 million. This dataset does not capture all sales or donations though. It would take a large 122 million addition to non-FAS shipments to hit USDA’s current 775 whole-year estimate. The prior five years averaged a 77 million adjustment (last year 114). It’s not unusual for USDA to hold from old crop changes given the June 30 Grain Stocks report is just around the corner. That will show an estimated old crop stock as of July 1. 


2023/24: Different than corn and soybeans, the trade considers the new crop wheat balance sheet to be “live”. New crop stocks were raised from last month’s 556 million estimate to 562. The trade estimate was 556 (ALDL 591). A minor 6 million bushel increase was noted for all-wheat production, now 1.665. USDA is still showing only a winter wheat breakdown. Other spring and durum will show on the July report. Hard red’s crop was raised from 514 to 525 million. Soft red was lowered by 4 to 402. White was lowered by 1 to 209. USDA chose to hold from new crop demand changes on this report. We do expect a lower export estimate to show in the coming months. Their current 725 million bushel June – May estimate would be -19% from the five year average. Bookings so far in this new year are -29% from the five year average pace. 


There were upward adjustments for our competitors. Russia’s crop was raised by 3.5 million tonnes to 85.0. Ukraine was upped by 1 to 17.5. India was noted with a 3.5 mt increase to 113.5. Current US wheat pricing is limited due to our clear price premiums on the export market, $50 – $80 per tonne.

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