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Market Analysis

The USDA’s final US crops and US/world S&Ds returned to their traditions of having some startling numbers in January data. Both US corn and soybean crop sizes were lower than trade estimates. 2022/23’s ending stocks were down, but their declines were modest with reduced USDA demand outlooks countering smaller crops. The USDA’s winter wheat seedings shot up 3.68 million acres, but TX and US Plains were 60% of the gain.

In corn, 2022’s crop was cut by 200 million bu to 13.73 billion. The surprise was that the USDA cut its harvested acres by 1.64 million acres vs September & this year’s total 6.1 million drops from last year.2022’s delayed planting & drought in the WCB & SW were 4.5 million of this yearly decline. Reduced acres boosted 2022’s US yield by 1 bu to 173.3 bu. The USDA cut corn’s exports by 150 million, sliced feed demand by 25 million, & left ethanol demand unchanged. Overall, ending stocks are down just 15 million bu vs last month, but 72 million lower than the trade at 1.24 billion. The USDA dropped Argentina’s crop by 3 mmt to 52 mmt, but a flurry of late S Am updates has Argentina’s crop down into the mid-40s. Brazil was cut by 1 mmt to 125 mmt because of Rio Grande dryness.

Soybeans also had some twists in its US crop with harvested acres down 300,000 while the US yield by sliced by 0.7 bu. This decreased the USDA’s 2022 crop by 70 million bu vs the trade’s 16 million higher estimate. Lower WCB and ILL (-1) yields were behind the USDA decline. The US crush was left unchanged, but exports were trimmed by 55 million bu despite sales being 70 million ahead of last year. 2022’s stocks were only down by 10 million to 210 million. The USDA did cut Argentina’s crop by 4 mmt to 45.50 mmt while upping Brazil’s crop by 1 mmt to 153 mmt.

No changes in wheat’s crop size, but beginning stocks were upped by 29 million. These bushels were shifted to this year’s feed demand so stocks are down 4 million. Given grazing, winter kill & drought, the big question is how many of last fall’s 3.68 million higher seedings will be harvested.

What’s Ahead:

The market’s attention will return to South America with Argentina’s weather and crop potential along with Ukraine’s export shipment pace given their ship insurance issue. The weather models have been flipping back & forth, so still looking to scale up old-crop sales to 80% & start 2023 marketings at 15% utilizing $6.75-90 and $15.75-15.95 and 2023 new-crop values of $6.09-12 and $14.20-30.

More By This Author:

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