Market Movers: USDA Report Day
The February supply/demand is typically a lower impact report. Minor revisions to US demand estimates and South American production changes are the focus. The first official new crop estimates from USDA will start with the March 30 Prospective Plantings. The first new crop numbers won’t be posted to this monthly supply/demand until May.
2022/23: Old crop US corn ending stocks were revised from 1.242 billion bushels on 1/12 to 1.267. That was next to the trade estimate of 1.266 (ALDL 1.317). USDA revised corn for ethanol down by 25 million bushels. September – December usage by ethanol plants totaled 1.708 billion, -6.5% from 2018/19. To hit USDA’s prior goal the remaining eight months would need to run +0.5% vs. 2018/19. Their new lowered goal is still high. Usage over eight months now has to run -0.2%. Only six separate weeks of the marketing year have ever met that pace. Confusingly, USDA choose to leave their prior 1.925 billion goal for exports unchanged. We have old only 52% of USDA’s whole-year goal. That is down sharply from the 68% five year average sales pace by this point. Additionally, there is no expectation for improvement ahead. Brazil port bids are currently $15 per tonne cheaper than the US. Though Brazil’s large second crop of corn is being planted late there is no concern over yields as pollination in April will be far after La Nina conditions are set to subside. USDA’s balance sheet, with no Argentine premium, would suggest economic value just over 660. Price action will be a little higher than that based on the trade’s private expectation for another cut to Argentina’s crop. Allendale, with ending stocks over 1.3 billion and potentially near 1.4 eventually, assumes a 620 old crop futures value.
World corn stocks were lowered from 296.4 million tonnes to 295.3. Argentina’s crop was lowered another 5 mt to 47. This was under the trade estimate of 48.5. USDA now sees the crop -15% from their original staring estimate of 55. Other estimates are 44.5 mt from the Buenos Aires Grains Exchange and the newly lowered 42.5 from the Rosario Grains Exchange.
Brazil’s crop was left unchanged at 125.0. Brazil’s government, Conab, lowered their estimate to 123.7 this morning. For exports USDA lowered their Argentine estimate by 3. That went right on the Brazil export estimate. Ukraine’s export estimate was raised by 2 to now 22.5.
2022/23: Old crop US soybean ending stocks were revised from 210 million bushels on 1/12 to 225. This was over the trade estimate of 211 (ALDL 176). The only change on the domestic balance sheet was a 15 million bushel cut for crush. We agree with that as the first four months of the marketing year saw usage -1.2% vs. the prior year. To make USDA’s prior goal work the next eight months would need to run +3.4%. This new goal is still a little hopeful. It would now take +2.4% over the next eight months. On this report USDA did not touch the quite strong export estimate. Our current sales pace is strong at 87% of USDA’s prior whole-year goal. That is over the 79% five year average pace normally seen by this point. We certainly should expect a lowered pace over the next few months. Brazil is $25 per tonne cheaper than the US Gulf. To hit USDA’s very low hope, remaining sales would need to fall to -36% from the five year average. With no Argentine premium old crop soybean futures would be valued at 1340. Allendale agreed with the crush decline but holds a stronger export estimate. Our current 176 million stock implies 1440 with no Argentine premium.
USDA lowered world soybean stocks from 103.5 million tonnes to 102.0. Argentina’s crop was lowered from 45.5 mt to now 41.0. The trade estimate was 42.3. Other estimates show the Buenos Aires Grains Exchange at 41.0. the US ag attache at 36.0 and the newly lowered Rosario Grains Exchange at 34.5. Brazil’s crop estimate was left unchanged at 153.0. Conab this morning made a minimal adjustment of no consequence, now at 152.9. China’s domestic use estimate was lowered by 1 but there was no change to the import guess.
2022/23: Old crop US wheat ending stocks were revised from 567 million bushels on 1/12 to 568. The trade estimate was 576 (ALDL 612). A minor 1 million increase was noted for seed. There was no change to last month’s 775 million bushel export estimate. Year to date sales come to 77% of USDA’s current whole-year goal. That is under the 86% five year average pace normally seen. For corn and soybeans, with a marketing year that ends in August, it is okay for USDA to pass on export changes at this time. For wheat, with a marketing year that ends in May, this is getting a little close. We still expect a 40 million bushel cut eventually.
World wheat ending stocks were raised from 268.4 to 269.3 million tonnes. Australian production was raised from 36.6 to 38.0. Old crop Russian production was raised by 1.