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USDA Finds Markets Nervous in November
On Tuesday, Nov. 9, USDA is expected to make small changes to ending stocks estimates of U.S. corn and wheat for 2021-22, but higher estimates could be in store for soybeans. Traders will be watching USDA's new crop estimates for corn and soybeans, as well as any demand changes the agency makes.
CORN
With over three-fourths of U.S. corn harvested, USDA's National Agricultural Statistics Service (NASS) is set to release its final crop estimate of 2021 at 11 a.m. CST on Tuesday, Nov. 9. Dow Jones' survey of 19 analysts expects USDA to estimate a slightly higher corn crop of 15.04 billion bushels (bb) based on a slightly higher yield estimate of 176.8 bushels per acre (bpa). Harvested acres are seen unchanged at 85.1 million.
The Eastern Corn Belt has been wet this year and progress has been slower than usual in Indiana, Kentucky and Tennessee. Even in those three states, the rain has been interrupted by enough days of dry weather to keep harvest advancing.
According to Dow Jones, USDA will lower its estimate of U.S. ending corn stocks from 1.500 bb to 1.482 bb, but that is not a sure thing. If there is a reduction in corn stocks, it will likely be because USDA acknowledges this season's stronger-than-expected start in ethanol production.
High shipping costs remain a concern for corn exports. Total U.S. sales commitments are down 7% from a year ago and China's purchases of U.S. corn have been quiet since May. Corn prices in China remain high enough to expect more U.S. purchases, but traders are still waiting for proof.
Dow Jones also expects USDA to lower its estimate of world ending corn stocks for 2021-22 from 301.74 million metric tons (mmt) to 301.4 mmt (11.87 bb). In October, USDA estimated China will consume 21.0 mmt (827 million bushels) more corn than it produces, an important sign for import expectations. Traders will be watching for any change in USDA's view of China.
SOYBEANS
As with corn, there will be a lot of attention given to USDA's new soybean crop estimate. Dow Jones' analysts expects USDA to raise the estimate from a record high 4.448 bb to an even higher 4.480 bb, based on a higher yield estimate of 51.9 bpa. Harvested acres are anticipated to stay at 86.4 million.
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The popular expectation for a higher soybean yield has been tempered lately by wet conditions slowing the remaining soybean harvest in the eastern Midwest. USDA's latest report of harvest progress showed Indiana and Michigan 15 percentage points below their five-year averages. Illinois was 11 points below. Wet soybeans sitting idle are vulnerable to crop quality issues and more rain is in this week's forecast.
Along with expectations for a slightly larger crop, Dow Jones' survey expects USDA to increase its estimate of U.S. ending soybean stocks from 320 million bushels (mb) to 360 mb in 2021-22, nearly twice as much as the 185 mb estimated just two months ago.
There is a risk USDA may estimate even more ending stocks than 360 mb and it will largely depend on USDA's view of the soybean export estimate. The current export estimate of 2.090 bb is down 8% from the previous year, but so far in 2021-22, U.S. soybean sales on the books are down 33% from a year ago.
This year's shipping problems are probably part of the reason for this year's decline, but it also looks like something is causing lower demand in China. China's purchases of U.S. soybeans are down 36% from a year ago at this time, and it doesn't help that Brazil's new soybean crop is off to an early start.
If there is good news for soybean demand, it is that crush values in the U.S. suggest increased crush activity ahead. However, crush in the first month of 2021-22 was disappointing, down 5% from last year, so it seems unlikely USDA will increase the crush estimate in Tuesday's report.
Dow Jones expects USDA to increase its estimate of world soybean stocks from 104.6 mmt to 105.7 mmt (3.88 bb), largely due to a larger U.S. crop. Keep in mind, USDA's world number does not reflect ending stocks for the Southern Hemisphere. In the October World Agricultural Supply and Demand Estimates (WASDE) report, Brazil's ending stocks were estimated at 130 mb for Jan. 31, 2022. Argentina's ending stocks were estimated at 342 mb for March 31, 2022.
WHEAT
After USDA made bullish adjustments to wheat's U.S. and world ending stocks estimates in October, the November report is only expecting minor changes. Traders will watch for tweaks to international crop estimates, namely Europe and Russia. Dow Jones' survey expects USDA to slightly reduce its estimate of world ending wheat stocks in 2021-22 from 277.18 mmt to 277.10 mmt (10.18 bb).
The U.S. ending wheat stocks estimate is expected to increase only slightly from October's estimate of 580 mb, but there may be some shuffling of estimates between classes. It will also be interesting to see if USDA adjusts spring wheat stocks higher after cash hard red spring (HRS) wheat prices unexpectedly tumbled lower last week.
Overall, corn and wheat estimates are not likely to change much in Tuesday's report, but there is bearish risk in USDA's soybean estimates. And, of course, there is always the chance USDA will have a post-Halloween surprise.
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Join DTN's webinar at noon CST Tuesday, Nov. 9, as I discuss USDA's latest estimates and what they mean for market prices. I'm also glad to answer any questions and DTN offers a rebroadcast link for your listening convenience. Register here for Tuesday's WASDE report webinar: https://ag.dtn.com/…
| U.S. PRODUCTION (Million Bushels) 2021-22 | ||||||
| Nov | Avg | High | Low | Oct | 2020-21 | |
| Corn | 15,040 | 15,222 | 14,778 | 15,019 | 14,111 | |
| Soybeans | 4,480 | 4,536 | 4,408 | 4,448 | 4,216 | |
| U.S. AVERAGE YIELD (Bushels Per Acre) 2021-22 (WASDE) | ||||||
| Nov | Avg | High | Low | Oct | 2020-21 | |
| Corn | 176.8 | 178.9 | 174.5 | 176.5 | 171.4 | |
| Soybeans | 51.9 | 52.5 | 51.0 | 51.5 | 51.0 | |
| U.S. HARVESTED ACRES (Million Acres) 2021-22 | ||||||
| Nov | Avg | High | Low | Oct | 2020-21 | |
| Corn | 85.1 | 85.3 | 84.6 | 85.1 | 82.3 | |
| Soybeans | 86.4 | 86.7 | 85.9 | 86.4 | 82.6 | |
| U.S. ENDING STOCKS (Million Bushels) 2021-22 | ||||||
| Nov | Average | High | Low | Oct | ||
| Corn | 1,482 | 1,675 | 1,320 | 1,500 | ||
| Soybeans | 360 | 449 | 285 | 320 | ||
| Wheat | 581 | 617 | 555 | 580 | ||
| WORLD ENDING STOCKS (Million metric tons) 2020-21 | ||||||
| Nov | Avg | High | Low | Oct | ||
| Corn | 290.6 | 292.0 | 290.0 | 290.0 | ||
| Soybeans | 99.7 | 101.2 | 99.2 | 99.2 | ||
| Wheat | 287.8 | 288.4 | 286.0 | 288.4 | ||
| WORLD ENDING STOCKS (million metric tons) 2021-22 | ||||||
| Nov | Avg. | High | Low | Oct | ||
| Corn | 301.4 | 303.9 | 297.0 | 301.7 | ||
| Soybeans | 105.7 | 106.9 | 104.6 | 104.6 | ||
| Wheat | 277.1 | 282.0 | 274.0 | 277.2 | ||
Todd Hultman can be reached at todd.hultman@dtn.com
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