July 12, 2023
The July WASDE report was bearish relative to trade expectations. The new balance sheets incorporated revisions from the June 30 Acreage and Quarterly Stocks reports. Updated yield, production and disappearance projections surprisingly translated to only modest changes to projected domestic 2023/24 ending stocks compared with last month. Market attention will continue to focus on weather’s impact to crop conditions across the Midwest with ongoing rainfall in drought-affected regions as well as the future of the Black Sea export corridor deal.
For corn, the domestic 2023/24 balance sheet included the higher planted acreage figure of 94.1 million with projected harvested area pegged at 86.3 million acres, up 2.2 million from the June forecast. As expected, yield was reduced from last month to 177.5 bushels per acre which was 4 bushels below the June forecast but 1.7 bushels above the average trade estimate and on the high end of the range of pre-report expectations between 172 and 178 bushels per acre. Beginning stocks were lowered 50 million bushels from last month due to a 150 million bushel increase to the old-crop feed and residual estimate more than offsetting a 25 million bushel cut to the ethanol use forecast and exports being lowered by 75 million bushels. Ending stocks were raised 5 million bushels from June to 2.262 billion bushels when on average the market was expecting a cut to 2.166 billion bushels with a range of estimates between 1.951 and 2.330 billion. The season-average farm price was left unchanged at $4.80 per bushel. While the current corn export forecast is now in line with cumulative YTD shipments, ethanol usage YTD suggests USDA could further cut the forecast by around 100 million bushels in upcoming WASDE reports as the 2022/23 marketing year winds down. The global corn balance sheet featured only modest changes from last month with world production forecast up 1.7 MMT from June with higher production in the U.S., Ukraine and Canada offsetting lower production in the EU. EU imports were raised 1.5 MMT from last month with Ukraine’s exports raised 500,000 tons. New crop ending stocks, pegged at 314.12 million metric tons, were slightly larger than the average pre-report estimate of 312.4 million, but within the range of expectations.
94.1 million acres would be the largest area planted since 2013/14 and the third highest on record:
At 177.5 bushels per acre, corn yield would be below trend but still record high:
Old crop corn exports are now in line with the historical pace needed to meet USDA’s annual forecast:
But corn use for ethanol remains over 100 million bushels behind the historical pace needed to meet USDA’s annual forecast:
The domestic soybean 2023/24 balance sheet included the lower planted acreage figure of 83.5 million with projected harvested area pegged at 82.7 million acres, down 4 million from the June forecast. Yield was left unchanged from last month at 52.0 bushels per acre, above the average trade estimate of 51.4 bushels and on the top end of the range of forecasts between 50.5 and 52.0 bushels per acre. The production estimate was raised 210 million bushels from June to 4.3 billion bushels; however, ending stocks were only reduced modestly by 50 million bushels to 300 million as higher beginning stocks and lower forecasted usage limited the impact from declining production. Beginning stocks were raised 25 million bushels as USDA cut old-crop exports 20 million bushels from last month while seed use was lowered 5 million bushels. New-crop exports were revised down 125 million bushels from June to 1.85 billion bushels, while the crush forecast was also cut 10 million bushels to 2.3 billion. The new-crop ending stocks forecast of 300 million bushels was well above the average pre-report estimate of 206 million and outside the range of estimates between 128 and 280 million. The new crop domestic season-average soybean price forecast was raised $0.30 from last month at $12.40 per bushel. The global soybean balance sheet called for lower production and ending stocks, led by reductions in the U.S. China’s import forecast for the current year was raised 1 MMT to 99 million but lowered in the upcoming year by 1 MMT to 99 million. Global ending stocks were cut 2.36 MMT to 120.98 million, slightly higher than the average pre-report estimate of 120.4 million and within the range of estimates between 116.7 and 123.1 million.
Soybean planted area of 83.5 million acres would be the lowest since 2020/21:
Soybean yield at 52.0 bushels per acre would match the record-high from 2016/17:
New crop soybean stocks-to-use at 7.0% would be up from last year’s 5.9% but remain historically low:
The 2023/24 domestic wheat balance sheet called for larger production and higher stocks. Harvested area was raised 0.6 bushels per acre from last month to 37.7 bushels with the yield estimate rising 1.2 bushels per acre to 46.1 bushels. Total wheat production was pegged up 74 million bushels from June to 1.739 billion bushels, which was slightly offset by lower beginning stocks, higher projected feed and residual usage, and lower imports. USDA raised old-crop feed and residual use by 31 million bushels but cut exports 16 million bushels. New-crop feed and residual use was increased 20 million bushels from last month while imports were lowered 5 million bushels. Ending stocks were increased 30 million bushels to 592 million, above the average pre-report estimate of 565 million and on the top end of the range of estimates between 540 and 593 million bushels. The projected season-average farm price was pegged at $7.50 per bushel, down 20 cents from last month’s estimate. Global wheat production was lowered over 3.5 MMT from last month as decreases for Argentina, Canada and the EU more than offset higher production in the U.S. Interestingly, China’s domestic wheat use for feed was increased by 2 MMT from last month, corroborating reports of increased wheat feeding at the expense of corn. World trade was projected down 1 MMT from last month as lower exports from Argentina and Canada were only partially offset by higher exports from Russia. The future of Russian exports and supply availability out of the Black Sea region continues to be a big question mark going forward. Also, global ending stocks were pegged at 266.5 MMT, well below the average trade estimate of 270.8 million and outside the range of analysts’ pre-report estimates between 268 and 272.5 million.
All wheat production is expected to rebound to 1.739 billion bushels this year from the past 2 seasons on larger harvested area and higher yield:
Domestic all wheat stocks-to-use at 31.9% is up marginally from last year but still the lowest since 2013/14:
Russian wheat exports pegged record-large but future supply availability remains a big unknown due to uncertainties with the Black Sea Grain Deal: