12 May 2022

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  • HEADLINES: KC wheat soars to new highs basis December; China to import 99 million mt of soybeans in 2022/23; Too much rain for Dakotas/MN in midday forecast.
  • Chicago futures are sharply higher in the wake of a bullish USDA May Crop Report that highlighted the yield/supply risks heading into the summer growing season. US farmers are struggling to get seed in the ground and WASDE no longer found it right to forecast a record large US corn yield at 181 bushels/acre. WADSE cut the yield to last year’s record at 177 bushels/acre. This yield reduction along with a statement that WASDE faced increased uncertainty due to the Russian war against Ukraine added to future supply/stocks uncertainty. Chicago futures rallied following the release of the report as there were no glaring bearish statistical inputs to produce a sustained Chicago price decline.
  • Corn Analysis: WASDE estimated the 2022 US corn crop at 14,460 million bu 655 million less than last year due to reduced seeding. NASS estimated US corn seeding at 89.5 million acres back on March 31 with harvested acres of 81.7 million. Due to flooding and excessive wetness across the N Plains and the NW Midwest, we forecast that this seeding estimate could fall another 1-2.5 million acres trimming US corn production back close to 14,100-14,250 million bu. The US corn crop is similar in production to 2020 when the harvest was 14,111 million bu.
  • WASDE estimated 2022/23 US corn demand at 14,565 million bu, down 370 million. WASDE cut US 2022/23 corn exports by 100 million bu to 2,400 million and reduced feed/residual by 275 million to 5,350 million bu. The smaller harvest always causes a cut in the residual. US corn ethanol was left unchanged from the current crop year at 5,375 million bu amid the high price of crude oil and record large US gasoline demand. 2022/23 US corn end stocks were forecast at 1,360 million bu with the average farmgate price being $6.75/bu. We would note that its only takes the loss of 1 million acres of planted/harvested and a drop in yield of 2 bushels/acre to pull 2022/23 US corn end stocks near 1,000 million bu. Each Central US weather forecast becomes more important heading into July. December corn has value below $7.20 with unknown upside price potential should adverse weather strike this summer.
  • Soybeans: US 2022/23 soybean end stocks were forecast at 310 million bu with the average US farmgate price being $14.40/bu. This implies limited downside price potential in November soybean futures below $14.00 until a record large US soybean yield can be assured. WASDE forecast the US soybean crop at a record large 4,640 million bu with a yield of 51.5 bushels/acre. NASS may find an additional 500,000-1.0 million acres in the June final report if Northern Plains and NW Midwest farmers are allowed by Mother Nature to seed in late May/early June.
  • WASDE estimated 2022/23 US soybean demand at a record large 4,580 million bu with exports pegged at 2,200 million and crush at 2,255 million. We see both estimates as low based on export sales to date and the number of new US soy crush plants that will be opening. China was forecast to import 99 million mt and 92 million mt in the current crop year. WASDE raised China old crop imports by 1.0 million.
  • Wheat: NASS estimated the 2022 US all wheat crop at 1,729 million bu with a US HRW wheat crop of 1.174 billion bu broken down to 590 million bu of HRW, 353 million bu of SRW and 230 million bu of SWW wheat. Spring wheat production was based on the March 31 seeding report and trendline yields. We note that this year’s wheat harvest is forecast to be 83 million bu larger than last year. The Kansas wheat crop was forecast at 271 million bu, Oklahoma at 60.0 million and Texas at 41.6 million. We look for further cuts in each of the primary HRW wheat states yield in June. The 2022 US winter wheat crop is 104 million bu less than last year with spring wheat to be 187 million bu larger. We fear a US all US wheat crop closer to 1,625-1,650 million bu by the final count in September.
  • WASDE estimated 2022/23 US wheat end stocks at 619 million bu, down 36 million from last year. 2022/23 US wheat exports were forecast at 775 million bu, a multi decade low and down 30 million from the current crop year. WASDE sees no US wheat export bump from the Russian war against Ukraine. US wheat feed/residual use was cut by 20 million bu from the current crop year to just 80 million. US wheat milling demand held steady at 764 million bu. Total US 2022/23 wheat use was forecast by WASDE at just 1,885 million bu, down 46 million. Russia is forecast to export 39.0 million mt, Ukraine 10.0 million mt and India 8.50 million mt. We are doubtful of such hefty Indian/Russian and Ukraine wheat export volumes.
  • We see the May WASDE report as confirming limited Chicago downside price risk from Monday’s low with a need for weather adversity for Dec corn/November soy to rise to new highs. Wheat prices will follow EU weather into June.
To download our USDA Data Recap as a PDF file please click on the link below: