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Agricultural News


Allendale's Rich Nelson Says USDA Lowered Hard Red Winter Wheat, but Offset that with Gains on Soft Red

Fri, 10 Jun 2022 14:37:11 CDT

Allendale's Rich Nelson Says USDA Lowered Hard Red Winter Wheat, but Offset that with Gains on Soft Red USDA on Friday released its June Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports.

Soybean stocks continued to tighten in USDA's June WASDE. The agency pegged 2021-22 (old-crop) soybean ending stocks at 205 million bushels (mb), down 30 mb from the May report. That remains the lowest level in six years.

Regarding Ukraine, USDA bumped up Ukraine's estimated 2022-23 corn production 5.5 million metric tons (mmt) to 25 mmt. USDA held firm on export estimates at 9 mmt, down from 23 mmt for the 2021-22 crop. USDA held pat on Ukraine's wheat production at 21.5 mmt and held exports at 10 mmt, down 9 mmt from a year ago.

Farm Director, KC Sheperd spoke with Allendale's Rich Nelson and he said USDA left old Wheat Crop stocks unchanged, "New Crop-wise, they did raise the winter wheat production estimate. They Lowered Hard Red, but they slightly offset that with gains for soft red as well as winter."

On production numbers for Oklahoma Nelson says we are still looking at a relatively tight crop, "Only 65 million bushels vs last years 115. For Texas, still low as well 40 million bushels, last year 74, and for Kansas, the number one producer, still quite low 271 million bushels, last year 364."

USDA decided to keep its old crop stock estimate unchanged from last month at 655. Nelson says "The trade expected a slight increase to 666 (ALDL 693). As the old crop marketing year ended on May 31, USDA is waiting for the final demand numbers, and the June Grain Stocks report, to balance out the picture. That Grain Stocks report puts the final stamp on old crop stocks. In our view, based on known export data through May, we expect an increase."

To hear KC's complete conversation with Allendale's Rich Nelson, click or tap below.

You can also access the full reports here:

-- Crop Production:

-- World Agricultural Supply and Demand Estimates (WASDE):

To see more premium content from Allendale, click here:

CORN

USDA's biggest move came in the old crop (2021-22) corn numbers where USDA lowered exports 50 million bushels (mb), leading to a bump in old-crop ending stocks by 45 mb to 1.485 billion bushels (bb).

That carryover of higher beginning stocks for corn led to a ripple effect throughout the 2022-23 corn number estimates with beginning stocks at 1.485 bb.

The 2022-23 new crop corn held firm on planting at 89.5 million acres with a 177 bushel-per-acre (bpa) average. Production remained pegged at 14.46 bb, the same as May. Total supply, because of the higher beginning stocks, was bumped up to 15.97 bb, up 45 mb as well.

For usage, Feed and Residual use for the new crop also held with the May projection at 5.35 bb. Feed, Seed and Industrial use was bumped up 5 mb to 6.820 bb.

Ethanol usage for the 2022-23 crop is forecast at 5.375 bb, the same as May as well.

Total domestic usage was bumped up by that 5 mb figure to 12.17 bb.

Exports are pegged at 2.4 bb also keeping with the May estimates.

Total usage for the 2022-23 crop is projected at 14.57 billion bushels, up 5 mb from May.

The average farmgate price for the 2022-23 crop is projected at $6.75 a bushel, the same as May.

Globally, USDA's beginning stocks for 2022-23 were 310.92 mmt, up 1.53 mmt from May. Global production is pegged at 1,185.81 mmt, up 5.09 mmt. Global exports are projected at 182.67 mmt, down slightly from last month. Ending stocks are projected at 310.45 mmt, up 5.32 mmt.

USDA bumped up Ukraine's estimated 2022-23 corn production 5.5 million metric tons to 25 mmt. USDA held firm on export estimates at 9 mmt, down from 23 mmt for the 2021-22 crop.

USDA held pat on Brazil's 2021-22 production at 116 mmt and Argentina's production at 53 mmt.

SOYBEANS

USDA left new-crop (2022-23) soybean production unchanged at 4.640 bb, based on a record-high 91 million planted acres and projected average yield of 51.5 bpa.

USDA's 30 mb downward adjustment to old-crop (2021-22) soybean ending stocks was based on a 30 mb increase in soybean exports for 2021-22. That tighter ending stocks situation rolled over into a lower supply situation for the new-crop season, which knocked new-crop ending stocks down 30 mb to 280 mb. That was the only change the agency made to new-crop supply and demand.

The agency bumped the average farm-gate prices for new-crop soybeans up 30 cents to $14.70 per bushel.

Against market expectations, USDA increased Brazil's 2021-22 soybean crop to 126 mmt, up 1 mmt from the May report, based on increased production reported in Mato Grasso. The agency also increased Argentina's soybean crop up above pre-report expectations, to 43.4 mmt, up from 42 mmt in May, based on better-than-expected reported yields.

Global old-crop world soybean ending stocks were pegged at 86.15 mmt, up from 85.2 mmt in May. And the increased South American production also gave a boost to new-crop ending stocks, which were increased to 100.46 mmt, up from 99.6 mmt in May.

WHEAT

USDA's domestic projection of a 1.737 bb new-crop wheat was a slight increase from 1.729 bb in the May report, with average yield set at 46.9 bpa, a slight increase from 46.6 bpa in May. New-crop ending stocks are expected to land at 627 mb.

Food, seed and residual use for new crop are unchanged from May at 1.110 bb, with exports also unchanged at 775 mb.

U.S. farm gate prices were pegged at $10.75, unchanged from May estimates.

U.S. winter wheat production in the new-crop year is projected to reach 1.18 bb, up 1% from May. Overall yield was pegged at 48.2 bushels per acre, a slight bump up from last month but down 2 bushels from last year.

Of those acres, hard red winter is pegged at 582 mb, down 1% from May's estimates. Soft red winter wheat was pegged at 358 mb, up 1% from May. White winter wheat production was set at 242 mb, is up 5% from last year.

Globally, USDA pegged new-crop wheat production at 773.43 mmt, down from 774.83 mmt in May, with ending stocks at 266.85 mmt, down slightly from 267.02 mmt last month. A tight situation remained tight with Ukraine production still at 21.5 mmt), India (down to 106 mmt from 108.5 mmt in May) and Australia (still at 30 mmt). USDA bumped up Russian production from 80 mmt in May to 81 mmt in June. European Union numbers were dropped from 136.5 mmt in May to 136.1 mmt in June. Old-crop ending stocks were pegged at 279.4 mmt.

LIVESTOCK

Friday's WASDE report shared positive news for the cattle complex, but mixed data for the hog sector. Beef production for 2022 has been raised by 65 million pounds as fed cattle slaughter and beef cow slaughter have far surpassed earlier expectations.

Quarterly steers prices didn't change from last month, which seems odd given that beef production did increase and export demand was raised as well. Beef exports grew by 65 million pounds and imports fell by 30 million pounds. Pork production for 2022 grew by 180 million pounds as the second quarter has seen increased slaughter speeds.

The June 29th Quarterly Hogs and Pigs Report should give more clarity to what pork supply and demand fundamentals look like for the third and fourth quarter. The quarterly price projections for barrows and gilts only saw a $2.00 reduction in the second quarter to average $75.00 while the other quarters remained unchanged. Pork exports grew by 40 million pounds, and pork imports grew by 35 million pounds from last month's report.


   

      

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