- HEADLINES: USDA September report slightly bullish for wheat/soybeans; Neutral to slightly bearish for corn on extra acres; Seasonal low forming for world wheat.
- The September USDA Crop Report was in line with trade expectations. NASS corn and soybean yields came out close to the pre-report private estimates, but Chicago values are lower following the report’s release. It is now up to actual harvest yield and crop quality reports and the late Sept Stocks/Final Small Grain Report to push Chicago valuations. We see a considerable amount of bearish news built into Chicago values ahead of the US harvest. We anticipate US corn/soy yields will fall further in the October NASS report.
- The US September corn yield was lowered to 173.8 bushels/acre (down 1.3 with harvested corn acres raised 800,000 acres to 87.1 million acres due to FSA data inclusion). The loss of US corn yield and gain in acres added 23 million bu vs August with the 2023 US corn crop pegged at 15,134 million bu. NASS estimated the IL corn yield at 198 bushels/acre, down 16 from last year. The MO corn yield was also down 16 at 145 bushels/acre with MN down 15 at 180 bushels/acre. The IA corn yield came in at 200 bushels/acre, steady with 2022.
- WASDE forecast 2023/24 world corn stocks at 314 million mt, up 3 million from September and up 14 million mt from last year. The 2023 Brazilian corn crop was raised to 137 million mt with exports at 57 million. China corn imports were raised by 500,000 mt to 18.50 million mt. 2023/24 world corn production is only 14 million mt more than use!
- NASS lowered their US soybean yield by 0.8 to 50.1 bushels/acre. US soy harvested acres were adjusted up by a meagre 100,000 acres to 82.8 million acres. 2023 US soybean production was dropped by 59 million bu to 4,146 million. Old crop US soybean stocks were trimmed by 10 million to 250 million bu on a hike in exports.
- 2023/24 US soybean end stocks were forecast at pipeline, 220 million bu. USDA was forced to cut US 2023/24 soybean exports by 35 million bu and crush by 10 million bu to accommodate such limited stocks. We do not believe that US crush can be cut any more due to hefty margins and the onboarding of new renewable diesel plants. US 2023/24 soyoil stocks are also estimated at pipeline at 1,821 million pounds. We would argue that WASDE is too conservative on its biofuel use of soyoil at 12,500 million pounds which could be 2,000 million pounds too low. The demand led bull market is soyoil with export demand not a factor in the years ahead.
- WASDE estimated that world 2023/24 soybean end stocks would ease slightly to 119.2 million mt via limited US stocks.
- Chinese 2022/23 soybean imports were raised to a record 102 million mt with next year’s imports placed at 100 million. Key support rests in November soybeans at $13.25 and a test of contract highs is forecast.
- WASDE wheat data leans supportive as USDA left its US balance sheet unchanged and trimmed a full 7 million mt from 2023/24 global ending stocks. World end stocks are now projected at 258.6 million mt, the lowest since 2015. Combined major exporter stocks were cut 1.8 million to 54 million mt, with stocks/use pegged at 13.5%, vs. 13.9% in August, the lowest since 2007/08. Crops were cut in Argentina, Australia, and Canada. USDA also lowered EU output another 1 million mt. A hike in Ukrainian production worth 1 million mt was only partially offsetting. Russia will be by far the world’s largest exporter at 49 million mt, but global wheat supplies are not abundant. We would also point out that combined wheat stocks in the US, EU, Australia, Canada, and Argentina will total only 39.5 million mt, also the lowest since 2007. Developing heat in Australia and another two weeks of dryness in Argentina now demands close monitoring.
- WASDE lowered US HRS exports 10 million and raised HRW exports a like amount. Final US wheat production will be published in NASS’s Small Grains Summary on September 30. Seasonal lows are being formed in world wheat values.
- Corn/soy markets have reacted negatively to NASS yield/supply data ahead of the harvest. Yet, downward yield revisions in September often foreshadow new cuts in October. We maintain final US corn/soy yield forecasts of 171 and 49 bushels/acre, respectively. The cash soy market will lead Chicago contracts higher as physical supply tightness develops. It remains critical that the wet season in Central Brazil arrives in a timely manner by October. Supply pressure is noted today, but dynamic/volatile markets persist indefinitely. Better sales opportunities occur mid-autumn onward. Actual yield data is key as Brazil sells record tonnages of corn to China.