USDA Supply And Demand Adjustments September 12, 2022

Market Movers: USDA Report Day

The September 12 monthly USDA report holds changes to crop demand, adjustments to new crop production and to new crop demand. This is the second month of a more intensive yield measurement from USDA. The August numbers include a farmer survey and other statistical measurements. The September report includes in-field analysis where applicable. There were 7,400 farmer surveys included in this month’s report. They were conducted from August 25 – September 7 for general estimates as of September 1.

Corn:

2021/22: USDA lowered its view of August 31 old crop ending stocks from 1.530 billion to 1.525. The trade estimate was for an increase to 1.547 (ALDL 1.542). Corn for ethanol was lowered again, this time by 20 million bushels. Old crop exports were raised by 25. This is not the end of the old crop year discussion. On September 30 the quarterly Grain Stocks report will release an official count of old crop stocks. This can still be market impacting. Over the prior five years the revision has ranged from -331 million bushels to +138 from this September 12 estimate.

2022/23: USDA chose to incorporate the Farm Service Agency’s estimates of corn plantings for producers in the farm program. Co-mingled with the official farmer survey from the National Agricultural Statistics Service, USDA lowered this year’s planted acreage by 1.2 million to 88.608. Their harvested estimate was lowered by 1.0. The trade expected a minor 154,000 decline for harvested. Yield was the main focus for today’s report. USDA’s decline from 175.4 bpa in August, to 172.5 in September, was right on the trade estimate. It was just 0.1 off the 172.4 bpa estimate from the Allendale Nationwide Producer Survey. We thank all producers for their participation. These changes brough production down from 14.359 billion last month to 13.944. This was under the 14.088 trade estimate (ALDL 14.156). This month’s decline in total supply from last month, 419 million bushels, was sizable. Offsets included -100 for feed/residual, -50 corn for ethanol and -100 in exports. These changes lowered the new crop ending stock forecast down from 1.388 billion last month to 1.219. This was next to the 1.217 trade estimate (ALDL 1.289). USDA’s stock level would imply a price of 670 for December corn. With our tables adjusted for the new acreage data, a 1.230 stock would suggest 665. The trade may attempt to hold a premium over these implied prices until the demand declines suggested are verified.

New crop world stocks were lowered from 306.7 to 304.5 million tonnes. Production was raised again for Ukraine by 1.5 mt to now 31.5. Their export estimate was also raised by 1.5. EU’s production was lowered again, this time by 1.2 mt to 58.8. China’s production was raised by 3 mt to 274 but no change was made to the 18 mt import estimate. USDA estimates their old crop imports at 23.0.

Soybeans:

2021/22: Old crop stocks were raised this month from 225 to now 240 million bushels. USDA left domestic crush unchanged at 2.205 billion. We suggest that could be raised by 5 million next month. Old crop exports were lowered by 15 on this report. These old crop numbers are simply estimates. On September 30 USDA will release a count of stocks as well as a revision to the complete 2021 harvest. USDA will That was next to the 226 trade estimate (ALDL 229). Exports were lowered by 10 million bushels. This is reasonable. Domestic demand was not changed on this report. We will note estimates for Monday’s NOPA crush report are better than expected. This category could be raised next month. This report has held substantial changes from the September 12 estimate. Over the past five years the revision has ranged from -92 million bushels to +81.

2022/23: As with corn USDA chose to incorporate the FSA farm program acreage into the official dataset this month. New crop plantings were lowered by 0.5 million to 87.455. Harvested was lowered by 0.6. On this report the trade estimate was for an increase of 77,000. Yield was the focus this month and USDA’s decline from 51.9 last month to 50.5 was a bit of a surprise. It was lower than all private market estimates. We are pleased to note it was only 0.4 bpa off the Allendale Nationwide Producer Survey’s 50.9. For soybeans in August, this was a good survey. Declines in both acreage and yield brought production 153 million bushels lower to now 4.378 billion. The trade estimate was 4.496 (ALDL 4.461). Offsets in demand came from -20 million for new crop domestic crush, -70 from exports and -3 from residual use. The export decline is the one that gets our interest. We have good new crop soybean export bookings. The concern is whether China’s September – December import demand, with lockdowns and processing margin concerns, will hold. Today’s ending stock decline, from 245 million to 200, was a bit under the trade estimate of 247 (ALDL 205). USDA’s stock estimate would imply 1400 for November soybeans. Our estimates, with lower acreage included, suggests 1440. Current post-report pricing is over our implied value.

New crop world stocks were lowered from 101.4 to 98.9 million tonnes. Few changes were made on the world balance sheet beyond the US. Chinese production estimates were left unchanged. Their import estimate was lowered from 98.0 to 97.0.

Wheat:

2022/23: There was no change in the 2022 wheat production estimate. USDA has not done so on this report since 2001. They will wait until the September 30 release of the annual Small Grains Summary report. This special report covers wheat, barley and oats. No changes were made to any demand categories this month and ending stocks were left at 610. The trade estimate was 618 (ALDL 638). We would still suggest December Chicago should be priced around 900 but don’t have confidence on that forecast given many psychological factors.

World wheat ending stocks were raised from 267.3 to 268.6. Canadian production was raised by 2 mt on this report while Ukraine was upped by 1 and Russia by 3. Many would suggest there is another 4 to 7 mt left for increases for Russia