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Market Analysis

The USDA’s dramatic June 30 changes in their 2023 US soybean & corn plantings have provide some significant unknowns ahead of the July 12 S&D updates. This year’s June swings of 2.1 million increase in corn (+5.5 million vs 22) & a 4.0 million decline in soybeans have intensified the focus on the US 2023 crop yields. The USDA will use last week’s plantings in their July 12 US balance sheets. This acreage data, June’s quarterly stock levels which were below the trade’s estimates & the current US processing & export trends will be utilized for July’s US supply/demands.

US soybean overseas shipments have been sluggish the past 4-6 weeks suggesting a 10 million slippage in this demand while the US soy crush has set records for 4 straight months compensating for reduced Argentine product shipments leaving these 2 US demands neutral. With the US G/E ratings the lowest in early July at 51% since 2012 and June’s US seedings 4 million than 2022, the USDA’s 2023 crop size could be 4.22 billion if a 51 yield is used (-1 bu lower). This substantial output decline will reduce beans’ 2024 carryover to 159 million bu even with a 100 million export reduction because of a larger 2024 Argentina crop. Talk of higher double crop US bean seedings after wheat are circulating, but a lower yield is a counter factor.

In corn, last week’s stocks suggest a possible 150 million bu overestimate of the 2022 crop with this past quarter’s feed/residual level at 1.0 billion vs 2022’s 850 million feed level. Strong summer ethanol demand could counter sluggish exports, but a 1.315 billion bu old-crop stocks is expected. Despite higher seedings, the current low ratings suggest a lower 176 bu US yield. This would keep corn’s 2023/24 stocks at 2.245 billion bu.

Wheat’s 2022/23 stocks were 18 million lower on stronger feed demand despite lower exports. Lower Plains & PNW yields could slip winter wheat’s output, but higher spring wheat seedings could keep US wheat output near June at 1.661 billion bu. Lower beginning stocks could lower 2024’s stocks to 540 million if demand unchanged.

What’s Ahead:

The USDA’s July 12 crop report will be highly anticipated after the June 30 acreage adjustments. How the USDA handles last quarter’s lower US corn & bean stocks than the calculations in their 22/23 balance sheets will also be very important. Hold new-crop bean sales at 35-40%. Looking to sell final 10% of old-crop corn & 30-40% of new-crop in $5.45-$5.60 ranges. Hold wheat sales for post-harvest rally.

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