FI Grain Market Update 08/12/22

PDF Attached

 

USDA released their August Acreage and Grain Stocks reports

 

Reaction: Bearish soybeans as the initial USDA survey revealed a higher-than-expected yield than trade expectations, but the US lost 311,000 harvested acres. Corn was seen friendly with global stocks down 6.3 million tons. Wheat was neutral, in our opinion, and prices should remain trading weather and demand.

 

USDA NASS briefing

https://www.nass.usda.gov/Newsroom/Executive_Briefings/index.php

USDA OCE Secretary’s Briefing

https://www.usda.gov/oce/commodity-markets/wasde/secretary-briefing

 

US 2021-22 soybean ending stocks were estimated at 225 million bushels, 10 million above July. US soybean exports were lowered 10 million bushels to 2.160 billion. USDA likely will need to take exports down at least another 15 million bushels, in our opinion. USDA reported the US soybean crop at 4.531 billion bushels, 26 million above July and 50 million above an average trade guess. The yield was 51.9 bu/ac, 0.4 bu above July and 0.8 bu above an average trade guess. The US soybean harvested area was down 311,000 acres. Recall USDA resurveyed ND, SD, and MN. New-crop US soybean ending stocks were raised 15 million bushels to 245 million (225 for 2021-22), 15 million above trade expectations. With supply up 36 million bushels, new-crop exports were taken up 20 million bushels to 2.155 billion. Residual was revised higher by 1 million. We are still in the camp that 2022-23 US ending stocks could fall below 200 million bushels based on higher crush and export estimates, and lower yield. The new-crop meal S&D was left unchanged. US soybean oil for biofuel was lowered 200 million pounds to 10.5 billion, inline with our projection. Slower than expected growth of renewable biodiesel production and higher use of other feedstock inputs led to a shortfall in SBO use expectations. The new-crop soybean demand was also left unchanged, but stocks were lifted 150 million pounds to reflect the lower 2021-22 industrial use and 50-million-pound cut to soybean oil imports for the current year. 

 

World new-crop soybean ending stocks were upward revised 1.8 million tons to 101.4 million, in part to higher global production and an upward revision to 2021-22 world ending stocks. USDA left old and new-crop Brazil and Argentina production unchanged but lowered 2021-22 (Oct-Sep) Brazil exports by 1 million tons to 80 million. 2022-23 new crop China soybean production was revised 900,000 tons higher to 18.4 million tons. If realized that is a 12.2% increase from 2021.

 

US 2021-22 corn ending stocks were estimated at 1530 million bushels, 20 million above July. 2021-22 corn for ethanol use was lowered 25 million bushels to 5.350 billion and food raised 5 million. USDA may have to lower 2021-22 corn exports in the next report unless shipments increase during the balance of this month. USDA reported the US corn crop at 14.359 billion bushels, 146 million below July and 33 million below an average trade guess. The yield was 175.4 bu/ac, 1.6 bu below July and 0.5 bu below an average trade guess. The corn harvested area was lowered 140,000 acres. US 2022-23 corn ending stocks were lowered 82 million bushels (14 million below trade expectations). With US supply down 127 million bushels, USDA lowered feed by 25 million bushels and exports by 25 million. They took food up 5 million.

 

For world corn, USDA made some ending stock adjustments for the 2020-21 and 2021-22 crop years. There were no major changes to the large corn producing countries for 2021-22 (Brazil and Argentina left unchanged), but world ending stocks were lowered 0.4 million tons to 276.4 million. The lower supply and production cuts for new-crop 2022-23 prompted USDA to lower 2022-23 global stock by 6.3 million tons to 306.7 million tons, 3.1 million below trade expectations. EU corn production was lowered 8 million tons to 60 million, 11 million below 2021. This is still too high, by at least 5 million tons, in our opinion. World corn production was lowered 6.3 million tons to 1180 million tons, 3.2% below year ago.

 

US 2022 production changes in wheat by class were seen neutral, but USDA made several changes to many countries. The US wheat production was revised up 2 million bushels to 1.783 billion, 8 million below an average trade guess. US winter wheat production was revised down 5 million with a reduction in HRW and WW more than offsetting an increase in SRW.  Other spring wheat was revised higher by 9 million bushels to 512 million and durum was revised lower by 4 million to 74 million. US 2022-23 all-wheat ending stocks were estimated at 610 million bushels, 29 million below July and compares to 660 million at the end of 2021-22. USDA made minor changes to its old crop US all-wheat demand by lowering exports by 4 million bushels, raising FSI by 10 and revising lower feed by 6 million bushels. For new-crop, USDA took FSI up 6 million and exports were raised 25 million.

 

Like corn, USDA made adjustment to world wheat ending stocks for the 2020-21 and 2021-22 crop years. The 2021-22 world wheat ending stocks were lowered a large 3.8 million tons to 276.4 million tons. USDA trimmed old crop stocks for three out of the six major exporting countries. 2022-23 world production was upward revised a large 8 million tons to a record 779.6 million tons, while stocks were seen down 200,000 tons from last month. Output for Russia, Australia (+3), and China (+3) were increase. Russia alone was taken up 6.5 million tons to 88 million tons. Reductions were posted for India (-3) and the EU (-2). The global feed and export demand was raised by USDA. A short corn crop in the EU could boost EU wheat for feed from USDA current projection of 43.0 million tons (45.5 MMT year ago), despite the 4.5% decrease in 2022 EU wheat production.

 

Attached PDF includes FI snapshot and supply projections

 

Price outlook:

September corn is seen in a $6.00 and $6.75 range

December corn is seen in a $5.50-$7.00 range

 

Soybeans – September $14.50-$15.75

Soybeans – November is seen in a $12.50-$16.00 range

Soybean meal – September $440-$485, December $380-$445

Soybean oil – September 66.50-70.00, December 61.00-72.00

 

Chicago – September $7.60 to $8.30 range, December $7.00-$10.50

KC – September $8.30 to $9.10 range, December $7.00-$10.75

MN – September $8.65‐$9.50, December $8.00-$11.50