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USDA released their January reports and unlike other years, there were no major fireworks. Positioning commenced post USDA report with selling in wheat and buying in soybeans, which left corn stick in the middle.
Initial reaction: Bearish grains and neutral soybean complex. Going forward we could see soybeans and corn prices trade sideways over the short term, and wheat to appreciate medium term led by HRW if US drought conditions across the central and southern Great Plains persist.
USDA OCE Secretary’s Briefing
https://www.usda.gov/oce/commodity-markets/wasde/secretary-briefing
US corn stocks as of December 1 were 11.647 billion bushels, in large part to an upward revision in corn production by 53 million bushels. Dec 1 stocks came in 45 million above trade expectations and perhaps the most bearish number found in these reports today, for corn. Soybean stocks as of December 1 of 3.149 billion were 20 million above trade expectations, and all-wheat December 1 stocks were 31 million below trade expectations.
US winter wheat seeds were only 142,000 acres above trade expectations at 34.397 million, 749,000 above 2021. HRW acres of 23.8 million were 234,000 below trade expectations, SRW of 7.07 million were a half million above the average trade guess and winter white of 3.560 million near trade expectations. We see no major price reaction from the seedings report, although it does favor HRW over SRW type wheat.
There was an aggressive move by USDA in response to the dryness in South America. Brazil soybean production was taken down 5 million tons and Argentina soybeans by 3 million. Paraguay soybeans were lowered 1.5 million tons. The combined 9.5 million ton decrease to those three countries contributed to the 6.8-million-ton reduction for USDA’s 2021-22 world ending stocks. Global soybean production was lowered 9.2 million tons (US upward revised 0.3MMT). One of the largest upsets for this report was an unchanged US soybean export projection. With export commitments running well more than 20 percent below last year’s level for this time of year, USDA left its 2.050 billion bushel estimate unchanged, which is down only 9.5 percent from 2020-21. The US crush was also left unchanged at 2.190 billion bushels. With production upward revised 10 million bushels, the carryout increased 10 million to 350 million, up from 257 million year ago.
USDA upward revised the US corn carryout by 47 million bushels to 1.540 billion, above 1.235 billion at the end of 2020-21. USDA upward revised their US corn production by 53 million to 15.115 billion after realizing a higher harvested area. Corn for ethanol was taken up 75 million bushels to 5.325 billion, same as our estimate, and above 5.028 billion used last season. Exports were lowered 75 million bushels to 2.425 billion. World corn production was lowered 1.8 million tons to 1.207 billion, 7.5% above 2020-21. Global ending stocks fell 2.5 million tons to 303.1 million. USDA lowered Argentina corn production by 0.5 million tons to 54.0 million tons and Brazil output by 3.0 million to 115 million. EU and Mexico corn production was lowered 400,000 tons each.
US all-wheat ending stocks were upward revised 30 million bushels to 628 million, below 845 million year ago. Imports were lowered 10 million, feed taken down 25 million and exports were downward revised 15 million. World wheat production was lifted higher by 700,000 tons and global ending stocks are up 1.8 million tons from the previous month. USDA lifted Argentina wheat production by 0.5 million tons to 20.5 million, a record. EU wheat was taken up 200,000 tons to 138.9 million. There were no changes to Russia or Ukraine production.
Price projections revised below.
Price outlook:
March corn is seen in a $5.70 to $6.20 range
Soybeans – March $13.00-$14.25
Soybean meal – March $370-$435
Soybean oil – March 54.50-61.00
Chicago March $7.20 to $8.40 range
KC March $7.5 to $8.75 range
MN March $8.75‐$10.00
Terry Reilly
Senior Commodity Analyst – Grain and Oilseeds
Futures International
One Lincoln Center
18 W 140 Butterfield Rd.
Oakbrook Terrace, Il. 60181
W: 312.604.1366
ICE IM: treilly1
Skype: fi.treilly
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Grain_Market_Snapshot011222.pdf