USDA Report Day January 12, 2023
Market Movers: USDA Report Day
In January USDA releases four separate reports on one day. The Annual Production Summary revises the fall harvest for corn and soybeans. This year’s effort sampled 72,600 producers. The quarterly Grain Stocks report, which gives a count of old crop remaining as of December 1, informs the trade about September – November miscellaneous use. The monthly supply/demand report, WASDE, incorporates changes from new production and demand numbers. The last, Winter Wheat Seedings, gives us the first look at completed fall plantings. There are no other new crop numbers in today’s releases. The next new crop report will be the March 30 Acreage Intentions. The first new crop numbers won’t be posted to the monthly WASDE until May.
2022/23: The completed fall corn harvest was revised down by 200 million bushels on today’s report to 13.730. That was under the 13.933 trade estimate (ALDL 13.933). Over the prior 20 year period there were only four other years with a larger decline. The quarterly Grain Stocks report showed only 10.809 billion of old crop as of December 1. That was under the 11.153 trade estimate (ALDL 10.752). To make this work it would imply Sep – Nov feed/residual at 2.334 billion. That would be -9% from last year, 219 million bushels. Given this year’s 1.176 billion smaller total corn supply USDA expects feed/residual to fall 443 million. There was no change in corn for ethanol despite year to date production -5% and USDA’s hope that the year will end -2%. Non-ethanol industrial was lowered by 10. We cannot argue with the 150 million drop in export numbers. We’ve been eyeing a potential total drop of 200 – 400. With a smaller production, and much of it offset via demand, stocks were lowered from 1.257 billion to 1.242. We are looking at an economic value here 660 – 665. Price action will be a little higher than that based on the trade’s private expectation for another cut to Argentina’s crop.
World corn stocks were lowered from 298.4 million tonnes to 296.4. Argentina’s crop was lowered by 3 mt to 52. Allendale privately expects a drop to 49. The Rosario Grains Exchange today slashed their estimate to 45. Brazil’s crop was also lowered by 1 mt to now 125.0. Conab, Brazil’s government, today suggested 125.1. On the bearish side China’s crop was raised by 2 mt and Ukraine’s export was raised by 3.
Soybeans:
2022/23: US soybean production was lowered by 70 million bushels on today’s report to 4.276 billion. The trade expected an increase to 4.362 (ALDL 4.361). This 70 million cut was the largest ever revision on a January report. The prior record was -55 in January 1988 for the 1987 crop. Many may question how they offset much of this via demand. Exports were cut by 55 million today. To make that work the remaining months through August need to see sales run -28% vs. the five year average. Though Brazil does have a price advantage now we would suggest that decline would be a bit much. USDA’s count of residual demand for the year was lowered by 5. Grain Stocks found 3.022 billion bushels left as of December 1. That was under the 3.132 estimate (ALDL 3.121). Ending stocks were lowered from 220 million to 210. That was under the 236 trade estimate (ALDL 207). If this was a realistic stock number then futures would run just under 1400. But the trade feels their export number may be too low and Argentina’s crop may need just one more revision. We would suggest prices past 1500 may be a little too much premium.
USDA increased world soybean stocks from 102.7 million tonnes to 103.5. Argentina’s crop was cut by 4 mt to 45.5. There may be just 1 or 2 left here using our view. It must be noted the Rosario Grains Exchange really cut their estimate today, now at 37! Brazil’s crop was raised to 153.0. Conab today estimated 152.7. China’s crop was raised by 1.9 t today the import estimate for the year was lowered by 2.
Wheat:
2022/23: There was no change to 2022 production. No one expected a change. The trade was surprised to see beginning stocks, what was left over from the 2021 crop as of May 31, 2022, lowered by 29 million bushels today. There was no change in the current crop export despite well-known shortfalls. Seed and feed/residual were lowered by 33 today. USDA counted 1.280 billion left over as of December 1. That represents what is left after six months of use. That was under the 1.344 trade estimate (ALDL 1.307). Stocks were lowered from 571 to 567 million. The trade was looking at 582 (ALDL 588).
World wheat ending stocks were raised from 267.3 to 268.4 million tonnes. Australian production was left unchanged at 36.6 despite recent private estimates up to 42. Ukraine’s crop and export estimate was raised by 0.5.
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