12 September 2022

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  • HEADLINES: USDA September report bullish on acres and yield; EU corn crop cut to 58.8 million mt, Ukraine corn crop raised to 31.5 million mt.
  • The September USDA Crop Report was bullish with corn/soy futures soaring on cuts in planted/harvested acres and yield. NASS cut US corn harvested acres by 900,000 acres to 89.5 million acres with soybeans cut 600,000 acres to 87.2 million acres. This combined with a cut in the US corn yield of 2.9 bushels/acre to (172.5) and a cut in the soybean yield of 1.4 bushels/acre to 50.5, which produced crops of 13,944 million bu of corn (down 415 million) and 4,633 million bu (down 138 million) of soybeans. History is in the side when a US crop declines from August to September, the decline continues into October. China is on holiday, but we doubt they will chase the rally with crush margins negative.
  • WASDE dropped their US 2022/23 corn end stocks to 1,219 million bu with a stocks/use ratio at 8.5%. USDA cut total US corn demand by 250 million bu including a decline in feed/residual and exports (100 million bu each) and a 50 million bu cut in the US corn ethanol grind. WASDE raised their annual US farmgate cash corn price to $6.75/bu. The USDA September report is bullish and argues that December corn should score a seasonal price high of $7.10-7.30 with key support noted under $6.40-6.50. Longer term, it is US corn export demand that will determine the amount of demand rationing that is occurring. The Iowa corn yield was pegged at 200 bushels/acre with Illinois at 204 bushels/acre.
  • World 2022/23 corn production was pegged at 1,172 million mt, with the Ukraine corn crop raised to 31.5 million mt with their exports raised to 13.00 million, up 500,000 mt. The EU corn crop was cut to 58.8 million mt with imports unchanged at 19 million.
  • The US soybean crop at 4,633 million bu included yields of 59 bushels/acre in Iowa and a record 64 bushels/acre in IL. The smaller crop caused WASDE to cut 2022/23 US soybean demand by 93 million to 4,433 million bu, up 7 million from last year. The breakdown of the demand cut was 20 million of crush, 70 million of exports, and a 3 million cut in the residual. We would argue that WASDE is too high on 2022/23 US soybean exports by 25-75 million bu which will add to end stocks. The US soybean end stocks of 200 million bu argues for a price range of $13.50-15.00. We doubt that a rally in November soybeans can be sustained above $15.00 at harvest.
  • USDA’s wheat updates were mixed, and it remains that Black Sea balance sheets continue to loosen while the non-Black Sea exporter balance sheet tightens. WASDE raised 2022 Russian output 3 million to 91 million mt and raised Ukrainian production 1 million mt to 20.5. However, combined Russian and Ukrainian exports were left unchanged. Russian 2022/23 wheat end stocks are now pegged at 15.4 million mt, the largest since 1990 and final Russian production is very likely to be raised another 3-5 million mt. Large Russian stocks will hang over the marketplace well into the second half of 2023.
  • Non-Black Sea exporter stocks were trimmed another 350,000 mt, with non-Black Sea exporter wheat stocks/use forecast at a newer record low 12.2%. Wheat feed consumption in Europe was raised a full 1 million mt as corn production there is trimmed further and as domestic wheat prices in Europe are competitive with corn and feed barley.
  • The US wheat balance sheet was left completely alone. Export shipment data is so far aligned with the USDA’s annual 825 million bu export forecast. It is USDA protocol to not touch US production in its Sep WASDE as NASS will release final US wheat production on Sep 30. Ongoing uncertainty in the Black Sea sustains a wide-swinging market, but there is little doubt N Hemisphere acreage expansion is needed to boost stocks in 2022/23.
  • Soybean acreage/yield data was a surprise, but otherwise harvest yield reports drive price direction over the next 30 days. The outlook leans positive into mid-autumn, but once US crop sizes are known, a correction is probable unless adverse dryness continues in Central and Northern Brazil into late October.
To download our USDA Data Recap as a PDF file please click on the link below: