12 January 2022

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  • HEADLINES: January USDA report as expected, no big surprises; S American weather and private crop estimates to rule Chicago close.
  • Chicago grain futures are slightly lower following the January USDA Crop report with US corn/soybean stocks slightly larger while WASDE raised world wheat end stocks due to an increase in Argentine production and a modest cut in world wheat trade. The USDA January report will not alter prevailing price trends with cash markets to underpin values on breaks. Chicago looks to be range bound until there is clarification on 2022 S American weather/crop sizes.
  • The USDA raised their estimate of US 2021/22 corn end stocks to 1,540 million bu, up 47 million from December. NASS raised its 2021 US corn planted area by 100,000 acres and harvested acres by 300,000. The 2021 US corn yield was held steady at 177.0 bushels/acre, the first time that the January yield held steady with November in over 2 decades.
  • WASDE held its farmgate cash corn price average at $5.45/bu. WASDE raised its ethanol grind estimate by 75 million bu to 5,325 million. We would forecast another 75 million bu hike.
  • We would disagree with WASDE on cutting US corn exports by 75 million bu due to growing S American corn crop losses and strong world feed wheat prices. We believe in a forecast of US 2021/22 corn exports rising to 2,600 million bu or 175 million above WASDE. We forecast 2021/22 US corn end stocks at 1,315 million bu or just above the levels of last year.
  • The USDA cut its 2022 Argentine corn crop estimate by 500,000 mt to 54.0 million mt and Brazil by 3 million mt to 115 million mt. We believe Both crops will be substantially adjusted lower in coming monthly reports.
  • NASS estimated the 2021 US soybean crop at 4,435 million bu with a yield of 51.4 bushels/acre. Harvested acres were trimmed by 100,000 to 86.3 million acres. The 10 million bu production increase in 2021 production. 2021/22 demand was left virtually unchanged leaving end stocks to grow by the same level as production to 350 million bu. We expects that the USDA will raise both crush and exports in future monthly reports so that 2021/22 US soybean end stocks fall below 300 million bu.
  • The average US farmgate cash soybean price was raised $0.50 to $12.60/bu. No statistical changes were offered to US soybean product stocks. A hike in the US soyoil yield was absorbed by greater exports.
  • The 2022 Brazilian soybean crop fell a record 5.0 million mt to 139 million with Argentina dropping 3.0 million to 46.5 million mt. The decline was more than expected, and supportive.
  • USDA wheat data is viewed as slightly bearish. Dec 1 US wheat stocks totalled 1,390 million bu, down 313 million from 2020 and below prior trade expectations, but USDA opted to trim annual US wheat feed/residual use another 25 million bu. The USDA also lowered 2021/22 US wheat exports 15 million to 825 million bu, with end stocks lifted 30 million bu to 628 million.
  • NASS pegged 2022/23 US winter wheat seedings at 34.4 million acres, up 749,000 acres year-on-year despite lower RMA acreage enrolment as of late Dec/early Jan. HRW seedings totalled 23.8 million acres, up 300,000 from last year. SRW acres were put at 7.1 million, up 420,000 (6%). Winter wheat seedings totalled 3.56 million, up 70,000. Assuming normal abandonment and trend yield, US winter wheat production is estimated at 1,333 million bu, vs. 1,277 million in 2021/22. US wheat balance sheets have loosened, but it remains that HRW stocks fall to a 9-year low 240-250 million bu in 2022/23 even assuming normal Plains spring weather.
  • Major exporter wheat stocks were raised 2.1 million mt as EU production was raised slightly and global trade was lowered 1.1 million mt. Major exporter stocks/use is now pegged at 13.2%, vs. 12.6% in Dec and is slightly above 2013’s record low 13.1%. Yet, bearish exporter wheat data has been digested, and we maintain spot Chicago is undervalued below $7.50.
  • Overall, USDA stocks data and S&D changes were dull when compared to recent years. All eyes now return to S American weather. Our work suggests US/global stocks will be revised lower in subsequent reports, with S American production numbers still way too high. Chicago stays longer term bullish and breaks offer new purchase opportunities. The risk vs reward stays with the bulls.
To download our USDA data recap as a PDF file please click on the link below: