Market Analysis

The USDA’s May updates had surprises in its US & World crop estimates that impacted their new-crop supply/demand forecasts this month. The World Board’s initial US winter wheat crop forecast was 100 million bu lower than trade’s expectations.

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After Argentina’s exchanges dip their soybean crop estimates into 21.5-22.5 mmt range & were projecting 32-36 mmt corn crops, no USDA changes in Argentina crop estimates of 27 & 37 mmt became head scratchers. The USDA also remained optimistic about US & World crop prospects resulting in substantial jumps in both supplies and ending stocks for corn and soybeans.

The USDA didn’t change its old-crop wheat S&D table, but their smaller hard red (514 vs 591 million) & PNW’s white wheat (210 vs 240 million) estimates dropped May’s 2023/24’s winter wheat crop by 130 million to 1.66 billion bu. KS’s yield was cut 8 bu from last year to 29 reducing its 2023 crop to 191.4 millon vs 244 million bu last year. 2023/24’s US ending stocks outlook was cut to 556 million bu, the smallest level since 2008. With the US, Australia & the Black Sea down, the USDA 2024 world stocks are projected at 264 vs 266 mmt this year.

Soybeans US 2022/23 balance sheet rose 5 million because of larger imports. However, the USDA utilized its Ag Outlook crop of 4.51 billion bu level in its 2023/24 balance sheet. They did slice exports by 50 to 1.975 billion which boosted ending stocks 335 mill vs 293 mill estimate. Despite no Argentina change, Brazil’s crop was upped 1 mmt to 155. With S Am’s major 2024 output upped by 29 mmt (Arg 48 & Brzl 163 mmt), the USDA is projecting a record 2024 world soybeans stock of 122.5 mmt & the highest carryover since 2018/19’s previous 114 mmt level.

The USDA lowered its 2022/23 corn exports by 75 million because of Chinese cancellations which upped US stocks to 1.417 billion bu. Utilizing the Ag Outlook’s 181.5 yield & 2023’s higher harvested area, a 15.265 billion bu was projected. The World Board upped their feed & ethanol demands by 50 million each, but they dropped exports by 100 million. These changes lead to a 2.222 billion stocks vs the trade’s 2.09 billion US stocks. These larger US & Argentina new-crop supplies raised USDA’s world stocks by 15.5 to 313 mmt, highest since 2018/19’s 322 mmt.

What’s Ahead:

Friday’s wheat rally activated a 25% KC July sale above $8.90 bringing our combined 22 & 23 supplies to 45% sold. World weather concerns could create some price firmness in the next month, but USDA’s sizable world corn and soybean crop levels limits upside until July.

Utilize current strong basis to move corn & beans to 90% leaving just 10% for a summer weather rally.

More By This Author:

A Big US Crop & Lower Exports Vs. The Size Of Brazil’s 2nd Crop
Pre-May US/World Soybean Update
US Corn & Soybean S&Ds Unchanged Despite Lower S Am Crops