12 October 2022

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  • HEADLINES: US soy/corn/wheat crops smaller; Combined US major crop exports cut 215 million bu; It is all about demand into 2023.
  • The USDA October Crop Report offered positive supply data, but a mixed market reaction. US 2022 soybean yield was the big surprise falling by another 0.7 bushels/acre to 49.8 bushels/acre. The hot/dry late summer finish impacted soybeans more than corn.
  • The US corn yield fell by 0.6 bushels/acre to 171.9 bushels/acre. And US wheat stocks were adjusted lower by 34 million bu to 576 million bu. We note that US 2022/23 corn exports were cut by 125 million bu, US wheat trade by 50 million bu and US soy exports by 40 million bu for a combined demand decline of 215 million bu. We would argue that USDA’s corn/soybean exports are too high with additional cuts ahead. Long corn/Short soy spreads are being exited supporting soybeans.
  • USDA lowered US 2022/23 corn end stocks to 1,172 million bu, a decline of 47 million. USDA dropped the 2022 corn crop to 13,895 million bu, down 1,179 million from last year. USDA raised its feed/residual use estimate by 50 million to 5,275 million bu but cut exports by 125 million bu and ethanol by 50 million to 5,275 million bu as Americans drive fewer miles. The average corn farmgate price was raised by 5 cents to $6.80. We argue for another 150-200 million bu cut in US corn exports which will take 2022/23 US corn end stocks to a more comfortable 1,350-1,400 million bu. China’s 2022/23 corn imports were steady at 18.0 million mt. We see spot Chicago corn trading in a range of $6.40-7.25 in weeks ahead.
  • WASDE held 2022/23 US soybean end stocks at a tight 200 million bu due to a 65 million bu fall in the 2022 US soybean crop and the resulting gain in old crop stocks to 274 million bu. WASDE increased the 2022/23 US soybean crush rate by 10 million bu to a record large 2,235 million bu while cutting exports by 40 million bu. Like corn, we would expect that WASDE will further cut its soybean export estimate in the months ahead by another 50-75 million bu. This has the potential to raise 2022/23 US soybean end stocks back near the current crop year at 275 million bu.
  • Commercials estimate an even larger cut in US soy exports, due to the low flow of the Mississippi River, but additional sales data is required. China’s 2022/23 soybean imports were raised to 98.0 million mt. The average annual US farmgate soy price fell to $14.00. We see spot Chicago soybeans in a range of $13.00-14.25.
  • USDA’s wheat updates were rather dull and mostly reflected NASS’s stocks and production data of late September. 2022/23 US wheat end stocks were trimmed 34 million bu to 576 million as production loss (133 million) was partially offset by lower projected consumption. Wheat feed use in 2022/23 is now pegged at just 50 million bu, the lowest since 2007/08, amid disappointing disappearance in the Jun-Aug quarter. Exports were lowered 50 million bu to 775 million amid non-competitive US offers. WASDE lowered total global wheat trade another 700,000 mt. US SRW stocks are projected to fall to a tight 91 million bu. But until there are signs that Russian exports are slowed further, the fear of outright shortages is lacking.
  • Russian and Ukrainian wheat balance sheets were left untouched. Non-Black Sea export production was lowered 2.5 million mt as gains in Europe were more than offset by losses in the US and Argentina. Non-Black Sea exporter stocks/use was reduced slightly for a third consecutive month.
  • USDA corn/wheat balance sheets were published as expected, while US soybean yield loss was a bullish surprise. We maintain that recent market strength is weighted heavily towards supply issues, and in the long run deliverable supplies will build without a quick improvement in the pace of US export demand. Yield is largely known. Updated IMF data paints a grim global economic picture into 2024, with global GDP growth in 2023 pegged at 2.7%. Future demand concerns are real and will act to cap any post-harvest rally in early November.
To download our USDA data recap as a PDF file please click on the link below: