12 January 2024

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  • HEADLINES: Record US corn yield a bearish surprise at 177.3 bushels/acre; US 2023/24 soybean stocks nudge higher on yield hike with USDA’s Brazil soybean crop at 157 million mt.
  • Chicago values are sharply lower following the USDA January Crop Report. The report raised US corn and soybean yields and cut harvested acres. 2024 US winter wheat seedings fell 2.3 million acres to 34.4 million acres. The biggest wheat class drop occurred in US SRW seeding which was down 13% to 6.86 million acres with Michigan wheat seeding at a record low. The report is bearish on the extra old crop supply due to higher than expected yield. Spot Chicago corn slipped below the $4.50 support level that held since September while spot Chicago soybean futures test $12.00. The report is seen as bearish with Chicago prices falling to reflect the extra US crop and record large S American production.
  • US combined 2023/23 corn, soybean and wheat stocks rose 55 million with corn up 31 million bu, soybeans up 35 million bu while wheat was down 11 million bu. The biggest surprises of the report were larger 2023 US corn/soy yields. The market is in decline to stimulate demand and curtail future production.
  • NASS raised the US 2023 corn yield to 177.3 bushels/acre, a new record. Harvested acres were adjusted downwards by 700,000 acres to 86.5 million. The US produced a record large corn crop of 15.34 billion bu. WASDE adjusted demand upwards by 75 million bu which produced a stock rise of 31 million bu and end stocks of 2,162 million bu. US Dec 1 corn stocks at 12,169 million bu are the largest since 2018. The report opened an additional 15-25 cents of downside price risk with March corn futures projected to drop to $4.30-4.40.
  • The 2023 US soy yield was raised 0.7 bushels/acre with harvested acres reduced 400,000 acres which raised the total crop to 4,165 million bu, a 24 million bu gain from November. WASDE left US demand unchanged and including a 4 million bu fall in old crop stocks, the net result was a 35 million bu increase in 2023/23 stocks to 280 million bu. We note that WASDE forecast 2023/24 US soyoil stocks at 1,577 million pounds, the same as November, with biofuel demand raised 200 million pounds to 13,000 million while food was cut 100 million, exports cut 50 million and imports were raised 50 million. The average cash price for US soyoil was estimated at 54 cents.
  • The 2024 Brazilian soybean crop was lower by 4 million mt to 157.0 million while Argentina’s crop was raised 2 million to 50 million mt with world 2023/24 soybean end stocks holding steady at 114 million mt. World corn stocks were raised 10 million to 325 million mt with world wheat stocks rising 2 million to 260 million mt. The additional of 12 million mt to world grain stocks is bearish but does not reflect full Brazilian crop losses.
  • NASS’s wheat data leans supportive, with 2023/24 carryover trimmed 12 million bu, 2023/24 end stocks lowered slightly and as winter wheat seedings last autumn fell 2.3 million acres year on year.
  • Dec 1 US wheat stocks were 1.41 billion bu, right at trade expectations, and which implies no meaningful change to 2023/24 disappearance. Jun-Nov US wheat feed disappearance is calculated at 184 million bu, up 57 million bu (44%) from the previous year. USDA’s annual wheat feed/residual use of 120 million bu is viewed as being within 5 million bu of reality. 2023/24 US wheat end stocks were trimmed 11 million bu to 648 million. Stocks/use of 34% justifies a range of $5.90-6.60, basis spot Chicago, into spring.
  • Winter wheat seedings totalled 34.4 million acres, vs. 36.7 million the prior year. HRW seedings are down 1.7 million at 24 million. SRW is down 0.5 million at 6.9 million. Assuming normal weather/trend yield, we project 2024/25 SRW end stocks to drop to 90-95 million bu, vs. USDA’s projected 107 million in 2023/24. HRW stocks expand 30-40 million to 310-320 million bu. Chicago will gain on KC wheat into early summer.
  • EU wheat end stocks were lifted 2.5 million mt on larger imports and lower exports. This was largely expected, but exporter and global end stocks were increased slightly.
  • The performance of corn and soy yields nationally despite regional weather issues has been the US market’s bearish catalyst since late summer, and NASS confirmed the absence of short-term supply issues. Corn, soy, and meal are deeply oversold, but a new supply spark is needed to trigger bulk/lasting short covering. Focus turns to Brazilian soy yield data in the weeks ahead. The range of Brazilian crop estimates is wide. Chicago has been in decline for months; this is no place for new sales.  We await rallies amid managed money positions that are massively short.
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