USDA Report Day June 30, 2023

Market Movers: USDA Report Day

Today’s two USDA reports cover both old crop and new crop information. Grain Stocks is the quarterly report showing a count of remaining old crop as of June 1. For corn and soybeans this is what is left over after three quarters of usage. For wheat, which operates on a June 1 – May 31 marketing year, this ends the old crop year. There are no numbers showing old crop production or demand in this report. Changes implied by this report will be reflected on the next WASDE set for July 12. The second report, Acreage, is USDA’s second major farmer survey of the year. 63,700 producers participated in today’s report. Of note for this report, different than the March Prospective Plantings, this report held both a planted and harvested estimate.

Corn:

2022/23: Old crop left over as of June 1 was estimated at 4.106 billion by USDA. This was under the 4.255 trade expectation (ALDL 4.086). This report is important for corn as it helps us compute March – May feed/residual, a demand category that has no weekly or monthly reports to monitor. With known exports and corn for ethanol usage in the prior quarter this implies Q3 feed/residual at 850 million. The prior two years in the same quarter totaled 851 and 889. Given the finding was under the trade estimate we could see USDA raise their whole-year feed/residual estimate by 25 million on the coming 7/12 monthly supply/demand report. We still expect a net decline in overall demand via exports and corn for ethanol when all said and done though.

2023/24: USDA’s re-survey effort found corn planting at 94.096 million acres. This was over the 91.583 trade estimate (ALDL 91.746). The acreage increase over the March survey was 2.1 million. Instead of a small decline as the trade expected we saw the fourth largest March to June increase since 1965. Only 2007 at +2.4, 1975 at +2.2 and 1971 with +3.2 were larger. This was a bit of a surprise. Harvest acreage at 86.322 was over USDA’s latest supply/demand report estimate by 2.2. This further adds to the headwinds that corn faces for pricing. We find it hard raising demand much to offset this supply increase. Trend yields of 181.5 bpa would imply ending stocks near 2.7 billion. A 5% yield hit, 172.4, would return 2.3 for stocks. A 10% yield hit of 163.4 would bring stocks to 1.9 and December corn pricing of $4.40. We would estimate current futures imply a yield hit of 11%. We expect that estimate to decline after the next two weeks.

Soybeans:

2022/24: USDA counted old crop stocks as of June 1 at 796 million bushels. That was just under the 812 trade estimate (ALDL 780). With known exports and domestic crush for the prior quarter this implies Q3 seed/feed/residual at 63 million. The prior two years were at 74 and 83 respectively.

2023/24: Soybean plantings were a big surprise today. USDA reported a decline of 4.0 million from the March survey, now at 83.505 million. Based on a fast planting for this year the trade expected a minor increase to 87.673 (ALDL 87.910). This 4.0 million acre decline would be the third largest since 1965. The prior declines were -4.6 in 2019 and -5.5 in 1983. Many would question whether soybean acres will actually stay here by the end of the year. There was nothing involved in this year’s actual planting numbers that would suggest anything close to two well-known years of significant problems. Harvested acres were pegged at 82.626 million. This is 4.1 under the 86.7 USDA used on the latest supply/demand court. We can argue about the realism of these numbers but they are here and will be on the trade’s balance sheet for the next few months. Trend yields, 52.0, would imply a stock of 255 and a price of $13.00 for November futures. We do not consider that out of bounds. -2.5% at 50.7 bpa would imply 206 for stocks and $14.00. A 5.0% yield revision would bring stocks down to 155 and imply price of $14.90. We would assume the market is comfortable at trend to -2.5% at this time. For now, soybean pricing does have a little renewed support.

Wheat:

2022/23: USDA counted June 1 US wheat stocks at 580 million bushels. That was under the 611 trade estimate (ALDL 621). This report wraps up the completed old crop marketing year. The Grain Stocks report is a quarterly count of old crop stocks. For wheat, this now officially ends the old crop year. USDA’s prior estimate for ending stocks on the 6/9 WASDE was 598. With known data on exports, and usually minimal surprises for food use, this implies the feed/residual category in March-May was 70 million bushels over last year at this time.

2023/24: All-wheat planting was revised minimally lower than March to now 49.628. The trade trade estimate was 49.656 (ALDL 49.533). Winter wheat acreage had already been reported on the January Winter Wheat Seedings report and the March Prospective Plantings. Today’s 37.005 million represented a decline of 0.5 from March. This is still sharply over 33.3 last year. The trade, given known planting problems, expected a slight decline to other spring acreage. USDA instead found 557,000 more to now 11.140. Harvested acres may be an area of interest given prior problems in hard red areas. Their 37.722 all-wheat harvested estimate would be over the 37.1 used on the June supply/demand. Wheat pricing has not been tied to the US balance sheet in recent months. This report would be seen as negative to hard red pricing.