USDA's Jan. 12 World Agricultural Supply and Demand Estimates (WASDE) report will also be accompanied by a report of Dec. 1 Grain Stocks and NASS' report of Winter Wheat and Canola Seedings. That is a lot of new numbers for the market to absorb, and the potential for surprises is high.
The reports will be released at 11 a.m. CST on Wednesday.
JANUARY WASDE REPORT
USDA's Jan. 12 WASDE report is not expected to show much change in U.S. corn and soybean production estimates from 2021, but the demand side of the ledger should get a lot of attention, along with South American crop estimates.
The first major USDA report of 2022 will start with a recap of corn production in 2021, but actual changes are expected to be small. On the whole, Dow Jones' pre-report survey of 21 analysts expects USDA to estimate the 2021 crop at 15.069 billion bushels (bb) with a yield of 177.1 bushels per acre (bpa) from 85.2 million harvested acres, very close to the December estimate of 15.062 bb and should remain the second-largest corn crop on record.
USDA's estimate of U.S. ending corn stocks is expected to be reduced slightly, from 1.493 bb to 1.485 bb. A change in the export estimate does not seem likely, but there is room for a higher estimate of ethanol demand than analysts expect. Ethanol production in 2021-22 has been running 9% above last year's pace at this time, more than the 4% increase USDA has penciled in.
With dry weather concerns in southern Brazil and Argentina a hot topic these days, any adjustments to USDA's corn crop estimates for Brazil and Argentina will get a lot of attention, currently set at 118.0 million metric tons (mmt) and 54.50 mmt, respectively. Brazil's crop agency, Conab, will have its own estimates out Tuesday, Jan. 11.
According to Dow Jones' survey, USDA is expected to reduce its estimate of world ending corn stocks from 305.5 mmt to 304.0 mmt or 11.97 bb. Attention will also be given to estimates for Ukraine and China.
As with corn, USDA's new production estimate for soybeans in 2021 is apt to be similar to December's 4.425 bb. But if it comes in higher than 4.428 bb, as 11 of Dow Jones' analysts estimate, it will be a new record high in 2021. Averaging all the analysts' guesses together, Dow Jones' survey expects USDA will post a new record-high 4.435 bb soybean crop, based on a yield of 51.8 bpa from 86.4 million harvested acres.
USDA's estimate of ending soybean stocks in 2021-22 is expecting a small increase, from 340 million bushels (mb) to 349 mb, but the uncertainty of the demand estimates is especially high. Early in the new season, U.S. soybean export sales and shipments are down 24% from a year ago, and business is already shifting to Brazil. Crush incentives in the U.S., however, are much higher than usual and are offsetting some of the export disappointment. It is difficult to know how USDA will contrast the two important demand estimates.
As with corn, there will be a lot of attention on USDA's soybean crop estimates for Brazil and Argentina, currently sitting at 144.0 mmt and 49.5 mmt, respectively. Given the dry weather conditions in southern Brazil and Argentina, lower crop estimates are deserved. However, it is doubtful either Conab's estimate on Tuesday or USDA's estimate on Wednesday will drop as low for Brazil as Thursday's estimate of 133.4 mmt (4.90 bb) from the private firm, AgRural.
According to Dow Jones, USDA's estimate of world soybean stocks is expected to be reduced from 102.0 mmt to 99.3 mmt or 3.65 bb.
No change is expected in USDA's 1.65 bb wheat production estimate for 2021, but a drop in USDA's export estimate looks like a good bet. Thirty-one weeks into 2021-22, U.S. export sales and shipments of wheat are down 24% from a year ago, well below USDA's current estimate for a 15% drop. Dow Jones' survey expects USDA to raise its estimate of U.S. ending wheat stocks from 598 mb to 610 mb, still the lowest in eight years, if true.
With favorable harvest reports from Australia and Argentina, bearish adjustments are likely on the way for world ending wheat stocks, but Dow Jones only expects a small increase, from 278.2 mmt to 279.7 mmt or 10.28 bb.
DEC. 1 GRAIN STOCKS
Dow Jones' survey expects USDA to find 11.583 bb of corn on hand as of Dec. 1, up 3% from last year's 11.294 bb and the most in three years. If true, first-quarter corn demand will have totaled 4.740 bb, down slightly from last year's record-high 4.761 bb.
For soybeans, Dow Jones expects USDA to find 3.110 bb on hand as of Dec. 1, up nearly 6% from last year's 2.947 bb. Assuming the survey is correct, soybean demand will have totaled 1.586 bb in the first quarter of 2021-22, the third highest on record.
Dec. 1 wheat stocks will mark the end of the first half of the 2021-22 wheat season and are expected at 1.446 bb, down 15% from last year's 1.703 bb and the lowest in 13 years. With wheat's lower stocks and higher prices, demand has been disappointing so far, and I suspect we could see a bearish surprise in Wednesday's wheat stocks.
U.S. WINTER WHEAT SEEDINGS
USDA will release its first estimates of winter wheat seeded areas for 2022, based on a NASS survey of producers from early December. According to Dow Jones' survey, USDA's estimate of U.S. winter wheat plantings is expected at 34.1 million acres for the new 2022-23 season, just a half-million more than a year ago.
Weather conditions may have played a role in limiting plantings, as the southwestern Plains were dry and the eastern Midwest was wet during the fall. However, winter wheat prices were also trading at their highest levels in several years, a strong incentive to increase plantings more than analysts estimated.
Dow Jones' survey expects USDA will estimate 24.0 million acres of hard red winter wheat, 6.6 million acres of soft red winter wheat and 3.5 million acres of white wheat. The HRW estimate is up a half-million acres from last year, while the other two are the same as last year.
Join us for DTN's webinar at 12:30 p.m. CST Wednesday, Jan. 12. We'll go over USDA's new estimates, what they mean for prices and answer any questions you might have. If you're busy at that time, a link will be provided to watch the webinar at your convenience. Register now at: https://ag.dtn.com/….
|U.S. PRODUCTION (Million Bushels) 2021-22|
|WINTER WHEAT ACREAGE (million acres) 2022-23|
|QUARTERLY STOCKS (million bushels)|
|U.S. ENDING STOCKS (Million Bushels) 2021-22|
|WORLD ENDING STOCKS (million metric tons) 2021-22|
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