- HEADLINES: WASDE disappoints and says low trust in NASS stocks data with no change in US corn/soybean end stocks; US wheat stocks raised on feed cut; US cash markets stay strong.
- The USDA April Crop Report held little market fanfare with WASDE holding US 2022/23 corn/soybean stocks steady with March, while raising US wheat end stocks by 30 million to 598 million bu. WASDE was willing to lower the US wheat feeding rate by 25 million bu and increase imports by 5 million, but it did not have the same confidence in NASS stocks data to raise the 2022/23 corn feed/residual use or the soybean residual per the March stocks report. WASDE has decided to wait until the last quarter of the crop year to make domestic demand adjustments based on crop size and feeding rates. It is possible that recent year adjustments in soybean residuals and corn feed/residual use have made them “gun-shy”. However, tightness of the cash market is noteworthy.
- WASDE left US corn 2022/23 end stocks at 1,342 million bu, the same as March with a stocks/use ratio of 9.7%. The March Stocks data argued that WASDE should raise its corn feed/residual use rate by 125-175 million bu, but it decided to wait.
- Recent China purchases of US corn argue for a bump in 2022/23 corn exports of 25-50 million bu. Here too, WASDE decided to wait for additional sales data. WASDE did lower their 2023 Argentine corn crop estimate by 3 million to 37 million mt and hold the Brazilian corn crop estimate unchanged at 125 million mt. World 2022/23 corn end stocks fell by 1.1 million to 295.35 million mt, down 11.6 million from 2021/22.
- US 2022/23 soybean end stocks held at 210 million bu, unchanged from March with the Argentine soybean crop falling 5 million to 27 million mt, while the Brazilian soybean crop was raised 1.0 million to a record large 154.0 million mt. World soybean crush rates were lowered 5.0 million mt with world trade holding steady. WASDE cut the Argentine soybean crush rate by 2.25 million to 32.0 million mt while raising Brazil’s by 500,000 mt to a record large 53.25 million mt.
- US soybean end stocks held at a historically tight 210 million bu with WASDE making no change in either their crush or export forecasts. The surprise was that WASDE kept last month’s residual use at 19 million bu deciding to ignore the NASS March Stocks estimate that showed that the 2022 crop was overstated by 60-70 million bu. Huge premiums for Central US soybeans will maintain the fear that the 2022 US soybean crop was overstated. We would argue that WASDE should have adjusted its soybean residual upwards. Also, WASDE kept China’s soybean imports at 96 million mt when vessel counts, and pace analysis argues for a total that is 8-12 million mt larger. We strongly doubt that a soy break can be sustained.
- USDA wheat data leans slightly bearish as combined Russian and Ukrainian exports were hiked 2.5 million mt. Russian exports were lifted 1.5 to a new record 45 million mt which allowed for EU stocks to be raised a full 1 million mt despite larger projected domestic use. US wheat feed/residual use was lowered 25 million bu following bearish Dec-Feb disappearance. US imports were lifted 5 million bu, and US all-wheat end stocks are pegged at 598 xm, vs. 568 million in March. Total world wheat end stocks were lowered 2 million mt amid enlarged feed disappearance.
- The cut to US wheat feed demand was centered entirely on the HRS and white wheat balance sheets. 2022/23 domestic use for those classes was lowered a combined 51 million bu. HRS stocks were boosted 31 million bu; white wheat stocks were increased 21 million. HRW stocks were lowered 9 million to 262. SRW stocks were lowered 14 million to 88 million. HRW stocks will be the lowest since 2013/14 and another year of contraction is guaranteed if soaking rain fails to develop across the Southern Plains in the next few weeks. SRW stocks in 2022/23 will be the second lowest since 2007/08.
- The April WASDE is surprisingly dull. We maintain that total 2022/23 US corn use must be raised by 100-150 million bu, with USDA’s US soybean residual too low by 30-40 million bu. This is being reflected in cash markets, and we note that some major markets this week are bidding $7.00 for corn delivered this week. Underlying themes are unchanged, namely extreme old crop supply tightness and the need for ideal Central US weather. Breaks provide opportunities for buyers. The Great Plains Drought will worsen which underpins Dec corn below $5.50. It is too early in the crop year to be bearish. It is surprising that with US March 1 corn/soybean and wheat stocks 680 million bu less, that WASDE did not adjust US domestic demand upwards. We guess that there must be a trust issue with NASS Quarterly Stocks estimates.