Market Movers: USDA Report Day September 29, 2023
Market Movers: USDA Report Day
At the end of September USDA issues two reports, quarterly Grain Stocks and the annual Small Grains Summary. The Grain Stocks report is a count of old crop remaining as of September 1. For corn and soybeans this puts the stamp on official ending stocks for the completed 2022/23 marketing year. USDA, through the September 12 monthly supply/demand report, has been making estimates. For wheat this represents old crop remaining after one quarter of use. USDA’s survey included 55,900 producers of all types of grains and 8,100 storage and processing facilities for this year’s report. The second report, Small Grains Summary, revises official production for wheat, barley, oats and rye. Producer surveys and objective yield data from 10 states was noted.
Corn:
2022/23: Old crop US corn ending stocks were finalized at 1.361 billion bushels. The trade estimate was 1.429 (ALDL 1.455). Today’s report revises USDA’s latest 1.452 estimate down by 91 million bushels. For now the fourth year in a row USDA has also included a revision of the 2022 fall harvest. That was changed from 13.730 billion bushels to 13.715. The trade estimate was 13.719 (ALDL 13.706). The coming October 12 supply/demand report, in doubt via government shutdown expectations, would show a detailed view of USDA’s revised import and demand numbers for old crop. For comparison to other years this revised 1.361 stock is just over the 1.377 and 1.235 numbers in the prior two years that were impacted by strong exports from the phase one trade deal. The prior six years posted larger stocks and generally lower prices, 2015/16 – 2019/20, at 1.731 – 2.221.
2023/24: There were no new crop numbers in today’s Grain Stocks report, only old crop changes. The story for new crop is strongly associated with the view of this as a supply transition year. The most recent September supply/demand report showed a sharp 1.4 billion bushel increase in production at 15.134. Separate from any moderate revisions that could be seen in the coming months this general narrative will still hold. Today’s report simply lowers the beginning stock estimate for new crop by 91 million bushels. That will not be enough to change the general narrative. Anything over 1.8 billion bushels for new crop suggests pricing in the low $4 range as a starting point. USDA’s new crop ending stock estimate on September 12 was 2.221. Bears could argue this market has been holding above economic value as it waited for today’s report, updated corn yields in October, rain in Argentina or perhaps lightly from energy prices.
Soybeans:
2022/23: Old crop US soybean ending stocks were finalized at 268 billion bushels. The trade estimate was 242 (ALDL 251). Today’s report revises USDA’s latest 250 estimate up by 18 million bushels. USDA has routinely adjusted the prior year’s production on this report. A minor 6 million bushel cut was reported for a total now at 4.270. The trade estimate was 4.269 (ALDL 4.321). The coming October 12 supply/demand report, in doubt via government shutdown expectations, would show a detailed view of USDA’s revised import and demand numbers for old crop. For comparison to other years this revised 268 stock is next to the 274 and 257 numbers in the prior two years that were impacted by strong exports from the phase one trade deal. The prior four years posted larger stocks and pricing under $10, 302 – 909.
2023/24: There were no new crop numbers on today’s Grain Stocks report, only old crop changes. The new crop soybean story has been a little more balanced than corn with USDA’s 350 million stock estimate in June lowered to 220 in September. But now we have added to our beginning stock by 18. In addition, when you factor in coming export revisions of 50 – 100 million bushels, separate from any remaining minor production declines, the trade has reason to start pricing in a 250 – 297 stock level. 250 stocks roughly imply $12.95 futures. 300 implies $12.20.
Wheat:
2023/24: The old crop marketing year for wheat ended on May 31. Both of today’s reports cover new crop information for wheat. The Small Grains Summary revised USDA’s new crop production view up by 78 million bushels to 1.811 billion. The trade expected a 5 million decline to 1.729 (ALDL 1.711). USDA also released old crop stocks as of September 1. At 1.780 billion, with help from higher production, this was just over the 1.772 trade expectation (ALDL 1.741). For some time wheat prices have not followed the generally tight US or world balance sheets. Instead, we’ve been eyeing monetary policy/US dollar and government intervention that insures Ukraine and Russian exports as drivers. Today’s report does not sharply increase the relatively tight new crop US balance sheet. It lightly adds for psychological pressure in an already negative market.
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