Two USDA reports important for grains are released on September 30, quarterly Grain Stocks and the annual Small Grains Summary. This specific Grain Stocks report is important as the September 1 numbers represent final old crop ending stocks. USDA’s most recent September 12 report used estimated old crop stock numbers. Included in this report are production revisions for corn and soybeans for the prior 2021 fall harvest. For wheat September 1 stocks are what is left over after one quarter of use. The second report, Small Grains Summary, revises the completed 2022 harvest estimates for wheat, barley and oats.
2021 Production: The prior year’s production was lowered by 41 million bushels to now 15.074 billion. The trade estimate was 15.091 (ALDL 15.115). This was only the third time the September Grain Stocks report posted a revised prior year production. The prior two were -71 million last year and +3 million two years ago. September 1 Old Crop Stocks: 1.377 billion bushels was the final stock number from USDA’s quarterly survey. This was under the 1.512 billion trade estimate (ALDL 1.504). This was a good 148 million bushels under their prior estimate from the September 12 WASDE. Beyond the production revision, we would compute June – August feed use at 783 million bushels to make this work. That would be 166 million over last year in the same period. This lower old crop stock number flows into the new crop balance sheet. If you assume a 50% offset from demand, as demand changes flow with supply changes, it would lower USDA’s new crop stock estimate from 1.219 billion to 1.135. That would imply $6.90 for December corn. Allendale, with our view of lower demand vs. USDA separate from today’s report, would suggest a 1.166 billion stock and a $6.85 price.
2021 Production: The prior year’s production was raised by 30 million bushels to now 4.465 billion. The trade estimate was 4.437 (ALDL 4.435). USDA has been posting prior year production revisions for soybeans since 2006. Of those there were seven increases averaging 46 million bushels, four decreases averaging 48 million and three making no change. September 1 Old Crop Stocks: 274 million bushels was the final stock number from USDA’s quarterly survey. This was over the 242 trade estimate (ALDL 264). This was a good 34 million bushels over their prior estimate from the September 12 WASDE. This lower old crop stock number flows into the new crop balance sheet. If you assume a 50% offset from demand, as demand changes flow with supply changes, it would raise USDA’s new crop stock estimate from 200 million to 217. That would imply $13.70 for November soybeans. Allendale, with a different demand point, would suggest a 203 million stock and a $13.95 price.
2022/23: A significant 133 million bushel decline was made to USDA’s prior 2022 wheat production estimate today. Now at 1.650 billion bushels, it was under the 1.778 trade expectation (ALDL 1.787). This decline was the largest ever for this report. The prior record was an 84 million bushel decline on the 2015 crop. The production decline was positive but it also highlights another problem when looking at the neutral September 1 Grain Stock count. At 1.776 billion it was right on the trade estimate (ALDL 1.813). To make this stock number work it would imply a June – August feed/residual use of only 110 million bushels. That is less than half last year’s Q1 use of 254. For ending stocks, a 50% demand offset to the production change would lower USDA’s prior 610 million estimate down to 546. However, with our view of a clear demand problem we’ll lower our estimate to 597. This would support prices 925 – 900 for December Chicago.