- HEADLINES: June WASDE offers no surprises; Focus back on Central US weather and rising oil share trade; Russian 2023 wheat crop estimated at 85 million mt.
- The USDA June Crop Report held little fanfare with 2022/23 and 2023/24 US corn ending stocks rising 35 million bu, 2022/23 and 2023/24 US soybean end stocks rising 15 million bu while US 2023/24 wheat end stocks rose 6 million bu. All combined the 56 million bu of additional combined US corn/soybean/wheat end stocks was not a surprise and the market’s attention will turn back to US/world weather and the ongoing tightness of old crop US corn/soybean stocks and the drawback of US soyoil from European crushed US soybeans for renewable diesel. Chicago corn, soybean and wheat values are mixed with the grains sagging while July soybean and soyoil rally to sharp daily gains.
- WASDE raised their estimate of 2022/23 US corn end stocks by 35 million bu to 1,452 million bu based on a 50 million bu cut in US 2022/23 corn exports to 1,750 million bu and a reduction in imports of 15 million bu to 25 million bu. No change was offered in feed and residual use which will be determined by the June Stocks Report. We would remind that the March US corn stocks data argued for a 100-150 million bu increase in 2022/23 US feed residual use, but WASDE decided to wait until June for statistical confirmation.
- US corn 2023/24 US corn end stocks were raised by 35 million bu to 2,257 million bu amid the additional old crop supply. WASDE made no change to its 2023 US corn yield at a record large 181.5 bushels/acre or to new crop demand. The average farmgate cash corn price was estimated at $4.80.
- 2022/23 world corn end stocks held steady at 297 million mt with the Brazilian corn crop rising 2 million mt to 132.00 million mt which was balanced against a 2 million mt fall in the Argentine crop to 35 million mt. World corn trade was unchanged at 176.5 million mt with the US corn export loss switched to Brazil (55 million mt total).
- WASDE raised 2022/23 US soybean end stocks to 230 million bu with a 15 million bu reduction in US soybean exports to 2,000 million bu. No other demand changes were made. The old crop US soybean exports were reduced on the slowing US sales pace, but recent old crop US soybean sales to the EU to produce soymeal (Argentine crop shortfall) with a drawback of the US soyoil for renewable diesel demand could underpin US 2022/23 soybean exports at 1,975 million bu. The US soybean crush pace is record large and on pace to achieve the USDA estimate. US 2023/24 soybean end stocks were raised by 15 million bu due to the larger old crop carry in with yield left at a lofty 52.0 bushels/acre.
- World 2022/23 soybean end stocks were 101.3 million mt with the Argentine crop cut 2 million mt to 25 million mt while the Brazilian soybean crop was left at 156 million mt. China soybean imports held at 98 million mt but looks to be raised to 101-104 million mt by October.
- USDA wheat data was neutral to slightly bearish. The US balance sheet was left mostly untouched, while global production was hiked 10.4 million mt amid yield increases in Russia, Ukraine, and Europe. We believe these adjustments to EU and Black Sea production as premature given stagnant dryness across some 50% of Europe’s wheat belt and as dryness lingers in Russian spring wheat areas.
- USDA now projects major wheat exporter stocks in 2023/24 at 59.2 million mt, vs. 55.7 in May, but vs. 63.7 in 2022/23. Exporter stocks/use was lifted to 14.6%, vs. 13.8% previously. Global balance sheet changes still come down to weather, with June critical to EU and Black Sea yield performance.
- Winter wheat yields were increased slightly in TX, OK and CO following improved rainfall since mid-May but were left alone in KS and NE. NASS raised total US winter wheat production 6 million bu to 1,136 million bu. HRW production is pegged at 525 million bu, vs. 514 million in May and 531 million last year. SRW production is estimated at 402 million, vs. 406 in May and vs. 337 million last year. US wheat end stocks were raised 6 million to 562 million to account for larger winter output. No other changes were made.
- Markets have done little post the report, and even grain/oilseed contracts in Europe have been unphased by USDA data, which are unimportant in June. It is immediately back to watching US, EU, and Black Sea weather patterns, with the midday GFS weather forecast having trended drier in MO and the Eastern Midwest. The GFS’s latest view is that meaningful rain next week will be pulled south of the primary ag belt. This pattern of elevated rain chances begins in just 48 hours. Sunday night’s forecast and actual radar drives prices nearby with extreme volatility anticipated. The need for rain is today! The risk is to the upside of next week’s rain is less than expected.
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