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USDA Offers New Estimates in Strained World Market
USDA's June 10 World Agricultural Supply and Demand Estimates (WASDE) report will offer new supply and demand estimates in a world affected by drought, famine, war in Ukraine, rising energy prices and the threat of higher interest rates ahead. Up against big themes, USDA will offer its best estimates on Friday at 11 a.m. CDT.
CORN
Usually at this time of year, there is a lot of excitement about how planting has gone and what it will mean for the fall harvest. That is true again this year, and we all have questions about how the crop mix may have been affected by this year's difficult planting conditions in the Northern Plains, but that issue won't be addressed until June 30.
Friday's WASDE report will likely stay with the same U.S. corn production estimate of 14.460 billion bushels (bb) in 2022-23, based on the March intentions survey of 89.5 million planted acres and a yield of 177.0 bushels per acre. Looking ahead, there is a chance some corn acres will be lost to excessively wet fields in North Dakota and Minnesota this year. Ohio has also been wet, but has maintained its normal planting pace, so far.
U.S. demand factors could be tweaked for both the old-crop and new-crop seasons, but if Dow Jones' survey of 18 analysts is correct, the changes will be minor. The survey expects USDA to lower its estimate of old-crop ending corn stocks from 1.440 bb to 1.438 bb. New-crop ending corn stocks are expected to slip from 1.360 bb to 1.337 bb. If true, ending stocks in the current 2021-22 season will be the second-lowest in eight years.
The market's demand clues have looked more bullish lately with DTN's national corn basis strengthening to 5 cents over the July futures price. As of the close on Wednesday, June 8, July corn is also boasting a 36 3/4-cent premium over the September contract, much larger than usual and hinting at strong commercial demand for supplies difficult to pry out of current holders.
USDA's world corn estimates face a complicated mix of international factors that make USDA's task even more difficult than usual on Friday. Brazil's corn harvest is just getting started, and on Wednesday, Brazil's crop agency, Conab, estimated 2021-22 corn production in Brazil at 115.2 million metric tons (mmt) or 4.54 bb. USDA's May estimate for Brazilian corn was 116.0 mmt and Dow Jones' survey expects the number to fall to 114.6 mmt as central Brazil has not recorded much rain since mid-April. For Argentina, the survey expects a small decrease in USDA's corn estimate, sliding from 53.0 mmt to 52.2 mmt or 2.06 bb.
For the new-crop season, Dow Jones' survey expects USDA to lower its estimate of world ending corn stocks slightly, from 305.13 mmt to 305.0 mmt, or 12.01 bb. Forgive me for not taking the number seriously, as USDA still contends China will have 8.0 bb of surplus corn in 2022-23, a fantasy that conflicts with China's substantial corn import totals and the expensive price of corn on China's Dalian exchange.
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Excluding China, USDA currently estimates 3.97 bb of world ending corn stocks in 2022-23, the third-lowest total in seven years. The extra difficulty of estimating corn stocks in 2022 is due to the war in Ukraine. Despite Russia's persistent public relations effort, there are numerous reasons to believe exporting grain out of Ukraine will remain an extremely difficult challenge this year.
SOYBEANS
As with corn, USDA's production estimate for U.S. soybeans is apt to stay unchanged in June at 4.640 bb, based on a record-high 91.0 million planted acres and a yield of 51.5 bushels per acre. Given the planting shifts that took place in this spring's wetter areas, it is possible soybean plantings went a little higher, but again, we won't see USDA's report on that topic until June 30.
As bullish as the demand indicators have been for soybeans lately, there are plenty of reasons to expect lower ending stocks estimates from USDA Friday. July soybeans scored a new closing high of $17.40 Wednesday and held a fat premium of 77 1/4 cents over the August contract, much larger than the 40 1/2-cent premium seen last year at this time. Both are bullish clues of aggressive commercial demand.
Dow Jones' survey expects USDA to lower its estimate of U.S. old-crop ending soybean stocks from 235 million bushels (mb) to 217 mb, the lowest in six years, if true. New-crop ending stocks are expected to drop from 310 mb to 295 mb, a more comfortable scenario that depends on weather cooperating in the U.S. this summer and in South America next year.
On Wednesday, June 8, Brazil's Conab slightly increased its estimate of Brazil's 2021-22 soybean crop to 124.3 mmt or 4.57 bb. Dow Jones' survey expects a little more from USDA, 124.8 mmt or 4.59 bb. Argentina's soybean crop is expected to increase slightly to 42.2 mmt or 1.55 bb, down 9% from a year ago.
USDA's world soybean stocks estimate is an odd mix of ending stocks in the Northern Hemisphere and midseason stocks in South America. Dow Jones' survey expects USDA's total for 2022-23 to increase slightly from 99.60 mmt to 99.80 mmt or 3.67 bb. USDA's actual ending soybeans stocks estimates for Brazil and Argentina in May were much lower, at 72 mb and 131 mb, respectively.
WHEAT
Not only will wheat get new supply and demand estimates in USDA's WASDE report Friday, but USDA's NASS will have estimates of U.S. winter wheat production in Friday's Crop Production report, also due out at 11 a.m. CDT. Only minor changes are likely with Dow Jones' survey expecting total U.S. wheat production of 1.726 bb, down a touch from last month's estimate of 1.729 bb.
Winter wheat production is expected to be slightly higher, at 1.181 bb and is broken down as 594 mb of hard red winter (HRW) wheat, 357 mb of soft red winter (SRW) wheat and 229 mb of white winter wheat. Of the three, HRW wheat production is having the toughest time in 2022, anticipated to be down 21% from last year's 749 mb.
Dow Jones' survey expects USDA to slightly increase its estimate of U.S. ending wheat stocks for 2022-23 from 619 mb to 622 mb, the lowest in nine years, if true.
Larger attention will likely be paid to USDA's world estimates for wheat with a lot still riding on the outcome of the war in Ukraine. Dow Jones' survey expects USDA to slightly increase its estimate of world ending wheat stocks from 267.02 mmt to 267.6 mmt or 9.83 bb, still the lowest in six years, if true.
Favorable weather may result in higher wheat crop estimates for Russia Friday, while India's crop has room to go lower. Europe is a mixed bag at the moment with crops in western Europe needing rain and crops in eastern Europe doing well.
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Join us at 12:30 p.m. CDT Tuesday, June 10, as DTN's webinar explains USDA's new estimates and what they mean for crop prices in the year ahead. We'll point out which estimates are helpful, which are not and will also compare USDA's view with the market's own clues. For those busy at 12:30 p.m., there will be a link provided to replay the webinar at your convenience. Register here for Friday's June WASDE report webinar: https://www.dtn.com/…
| U.S. PRODUCTION (million bushels) 2022-23 | ||||||
| Jun | Avg. | High | Low | May | 2021-22 | |
| Corn | 14,442 | 14,542 | 14,283 | 14,460 | 15,115 | |
| Soybeans | 4,638 | 4,655 | 4,610 | 4,640 | 4,435 | |
| All Wheat | 1,726 | 1,810 | 1,628 | 1,729 | 1,646 | |
| Winter | 1,181 | 1,220 | 1,157 | 1,174 | 1,277 | |
| HRW | 594 | 685 | 571 | 590 | 749 | |
| SRW | 357 | 375 | 344 | 354 | 361 | |
| White | 229 | 245 | 170 | 230 | 167 | |
| U.S. ENDING STOCKS (Million Bushels) 2021-22 | ||||||
| Jun | Average | High | Low | May | ||
| Corn | 1,438 | 1,485 | 1,386 | 1,440 | ||
| Soybeans | 217 | 235 | 175 | 235 | ||
| Wheat | 661 | 693 | 645 | 655 | ||
| U.S. ENDING STOCKS (Million Bushels) 2022-23 | ||||||
| Jun | Average | High | Low | May | ||
| Corn | 1,337 | 1,425 | 1,198 | 1,360 | ||
| Soybeans | 295 | 355 | 250 | 310 | ||
| Wheat | 622 | 725 | 580 | 619 | ||
| WORLD ENDING STOCKS (million metric tons) 2021-22 | ||||||
| Jun | Avg. | High | Low | May | ||
| Corn | 308.9 | 311.0 | 298.0 | 309.4 | ||
| Soybeans | 85.0 | 86.2 | 83.1 | 85.2 | ||
| Wheat | 278.9 | 281.3 | 272.0 | 279.7 | ||
| WORLD ENDING STOCKS (million metric tons) 2022-23 | ||||||
| Jun | Avg. | High | Low | May | ||
| Corn | 305.0 | 309.4 | 300.0 | 305.1 | ||
| Soybeans | 99.8 | 102.9 | 97.5 | 99.6 | ||
| Wheat | 267.6 | 277.2 | 260.0 | 267.0 | ||
| WORLD PRODUCTION (million metric tons) 2021-22 | ||||||
| Jun | Avg | High | Low | May | ||
| CORN | ||||||
| Argentina | 52.2 | 53.5 | 50.0 | 53.0 | ||
| Brazil | 114.6 | 116.8 | 110.0 | 116.0 | ||
| SOYBEANS | ||||||
| Argentina | 42.2 | 43.0 | 41.0 | 42.0 | ||
| Brazil | 124.8 | 125.5 | 123.0 | 125.0 | ||
Todd Hultman can be reached at todd.hultman@dtn.com
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