On Tuesday, Jan. 12, USDA will release its latest Crop Production, World Agricultural Supply and Demand Estimates (WASDE), Quarterly Grain Stocks and Winter Wheat Seedings reports. There will be many new numbers to consider, ranging from the latest estimates of U.S. ending stocks to U.S. and South American crop estimates, Dec. 1 U.S. grain stocks and U.S. winter wheat planting estimates.
Below is a more in-depth look at what we're expecting on Tuesday.
Starting with USDA's World Agricultural Supply and Demand Estimates (WASDE) report, Dow Jones' pre-report survey of analysts expects USDA to lower its estimate of U.S. ending corn stocks from 1.702 billion bushels (bb) to 1.597 bb, based on a lower crop of 14.434 bb and a slightly lower yield of 175.0 bushels per acre (bpa). If true, it would be the lowest ending corn stocks in seven years.
The 73 million bushels (mb) reduction in the stocks estimate is reasonable as the basis in corn has been stronger than usual for this time of year. Depending on the new-crop estimate, a larger reduction in corn stocks could be seen. USDA's feed demand estimate of 5.700 bb seems low but is apt to be restrained by high prices. Ethanol demand at 5.050 bb is down 7% from last year's pre-pandemic estimate and sounds about right.
USDA's 2.65 bb export estimate has potential to go higher, but sales have slowed lately and there is plenty of time for USDA to make adjustments in the next seven months.
USDA's world estimates make no sense, claiming China has 7.5 bb of surplus corn in 2020-21. Dow Jones' analysts expect USDA to lower its estimate of world ending corn stocks from 289.0 million metric tons (mmt) to 284.0 mmt, or 11.18 bb.
More importantly, USDA's estimate of ending corn stocks at the top four exporters may see a small reduction from 2.15 bb in December -- the lowest in five years. It may be too early for USDA to change its corn crop estimate for Brazil, but a slight reduction is possible for Argentina's crop, currently estimated at 49.0 mmt and needing rain as the crop nears pollination.
Looking at the estimate of U.S. corn stocks on Dec. 1, Dow Jones' survey expects USDA to find 11.642 bb of corn on hand, up from 11.327 bb a year ago. If true, that would mean corn had record demand of 4.885 bb in the first quarter of 2020-21, even though the early shipment pace has been slow.
With spot corn already trading near $5.00, it will be difficult for Tuesday's report to lift prices further as 1.597 bb of ending stocks still suggests cash prices belong in the low $4s. A bullish soybean report, however, could send corn prices higher.
According to Dow Jones, USDA is expected to lower its estimate of U.S. ending soybean stocks from 175 mb to 135 mb or close to 3% of annual use. If true, that would be the tightest supply situation for soybeans since 2013-14. Actual supplies may even be tighter as USDA has been slow to respond to rising export sales.
According to USDA's weekly export sales reports, the U.S. already has 2.019 bb of export sales on the books and USDA's export estimate is only at 2.200 bb for all of 2020-21. There is always a risk of cancellations, but a higher export total is highly likely as China has already shipped 83% of its purchases.
After seeing a lower crop estimate in November, there is also a good case to be made that the January crop estimate could come in lower. Dow Jones' analysts expect USDA to lower the soybean crop estimate from 4.170 bb to 4.155 bb with a slightly lower yield of 50.5 mb.
The above scenario is already extremely bullish, but I also have to mention U.S. soybean crush demand was up 7% in the first three months of 2020-21. USDA only has a 1% increase in crush penciled in, so a higher crush estimate is also possible Tuesday.
For world soybean stocks, Dow Jones expects USDA to lower its total from 85.6 mmt to 83.0 mmt, or 3.05 bb. Keep in mind USDA's totals are midseason estimates for South America. In December, USDA estimated Brazil's actual ending soybean supplies will total just 55 mb on Jan. 31, 2021.
In the grain stocks report, Dow Jones expects USDA to find 2.904 bb of U.S. soybeans in storage as of Dec. 1, 2020, down from 3.252 bb a year ago. If true, first quarter demand will have achieved a new record of 1.805 bb -- a remarkable accomplishment in a year hit by a global pandemic.
This tends to be a quiet time of year for wheat news and only small changes are expected in Tuesday's WASDE estimates. Dow Jones' survey looks for USDA's estimate of U.S. ending wheat stocks to decline from 862 mb to 856 mb, hardly worth mentioning. Similarly, USDA's estimate of world ending wheat stocks is expected to come down, from 316.5 mmt to 315.3 mmt, or 11.59 bb.
Because there has been talk of Russia limiting wheat exports, starting in February, it will be interesting to see if USDA makes any adjustment to Russia's wheat export estimate.
USDA's Winter Wheat Seedings report will get brief attention with many expecting to see a slight increase in winter wheat plantings for 2021-22. Dow Jones' survey expects USDA to report 31.4 million acres of winter wheat planted, up from last year's 30.4 million acres, which was also the lowest on record since 1909.
Hard red winter (HRW) wheat plantings are expected at 22.1 million acres, up from 21.4 million acres a year ago. Soft red winter (SRW) wheat plantings are expected at 5.8 million acres, up from 5.6 million a year ago. White winter wheat acres are expected to stay the same at 3.5 million acres.
USDA's estimate of Dec. 1 wheat stocks will tell us about demand in the first half of 2020-21 and expectations are in line with what we've seen the last several years. Dow Jones' survey expects USDA to find 1.695 bb of U.S. wheat on hand as of Dec. 1, less than last year's 1.841 bb.
If true, U.S. wheat demand will have totaled 1.279 bb in the first half of 2020-21, very close to the same level of demand seen last year.
Given all the numbers USDA will be releasing Tuesday, it seems likely at least one surprise will be waiting, and that is a good reason to join our noon CST webinar, one hour after USDA's reports are released. I'll explain the numbers of the day, what they mean for prices and talk about how USDA's numbers compare to the latest market clues.
Register for Tuesday's webinar at:
|U.S. PRODUCTION (Million Bushels) 2020-21|
|WINTER WHEAT ACREAGE (million acres) 2021-22|
|QUARTERLY STOCKS (million bushels)|
|U.S. ENDING STOCKS (Million Bushels) 2020-21|
|WORLD ENDING STOCKS (million metric tons) 2020-21|
Todd Hultman can be reached at email@example.com
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