Allendale's Rich Nelson says Latest WASDE shows Smaller Yields and Smaller Acres for Corn and SoybeansMon, 12 Sep 2022 14:40:43 CDT
The September WASDE (World Agricultural Supply and demand estimates) was released today and the report showed neutral for corn and wheat, bullish for soybeans. Farm Director KC Sheperd spoke with Rich Nelson at Allendale, and he said on the Wheat Side, this is not a report where USDA Changes wheat production, "They haven't touched production on this report since back in 2001. Instead, USDA wants to wait until the end of the month for the September 30 Annual small grains summary report." Nelson said this report revises production for wheat, barley, and oats: "So all these numbers for production on the wheat side were left unchanged here today, and also the same for stocks. Ending stocks left at 610. So, for today's discussion, corn and wheat did see little support as the acreage declines were a bit better than expected, and for soybeans, smaller yields, but certainly, we'll have a few more numbers change here on this next October report up ahead."
Nelson said the Russia/Ukraine War is still a topic of discussion, "On the Russia side, that's a little frustrating. So USDA did recognize a little higher production on this report, 88 million tons last month, now 91, And most of the private side is still 95 to 97. So USDA will have to raise production yet again. The issue is they left exports unchanged, and, with July, August, and now September export data out of Russia, including the estimates, these numbers are missing the mark. So we are not shipping out a record amount here just yet for our record crop. So this is still something which might frustrate some people."
Drought is still ongoing throughout parts of the US, and Nelson said that does play a role in this month's numbers, "That is a significant issue, but they're not showing up in the numbers. But you know, USDA certainly does recognize that, hey, we got some good August rains for much of the southern plains. That gave us a resurgence for at least a period of time. The current concern is that the forecasters tell us we're going to remain back into a drier than normal bias in the weeks ahead. So we might slow up a little on Winter wheat plantings as we go into the second half of September."
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USDA on Monday cut corn production 415 million bushels (mb) to 13.94 billion bushels (bb), and also cut soybean production 153 mb to 4.378 bb as well.
Corn yield was lowered corn yields 2.9 bushels to 172.5 bushels per acre (bpa), which fell in line with pre-report estimates.
Soybean yield was cut 1.4 bpa to 50.5 bpa
USDA expects farmers to harvest 1.783 bb of wheat in 2022-23. Production is unchanged from last month, which is expected. USDA will update its wheat production forecasts in its Small Grains Summary, which will be released Sept. 30.
The agency made no changes to demand either, leaving ending stocks unchanged at 610 mb. It did, however, lower the national average farm gate price by a quarter to $9.00 per bushel.
USDA made many more changes to global wheat figures of 2022-23. Ending stocks rose to 268.57 mmt, up 1.23 mmt from last month. USDA sees higher supplies, consumption and exports, with production increases in Ukraine and Russia offsetting lower beginning stocks. Ukrainian production was increased by 1 mmt to 20.5 mmt, while Russian production was up 3 mmt to 91 mmt. If realized, Russian production would be a new record.
USDA lowered planted acreage for the 2022-23 corn crop by 1.2 million acres (ma) to 88.6 ma and cut estimated harvested acres by 1 ma to 80.8 million acres. USDA dropped the yield estimate 2.9 bpa to 172.5 bushels per acre. The average pre-report yield estimate was 172.4 bpa.
That put corn production at 13.944 bb.
USDA also lowered the old-crop carryover by 5 mb to 1.525 bb.
On the demand side, USDA cut 2022-23 Feed and Residual use by 100 mb to 5.225 bb. Feed, Seed and Industrial use overall came at 6.775 bb, down 50 mb. Ethanol usage also was cut 50 mb to 5.325 bb.
Total domestic usage came in at an even 12 bb, down 150 mb from August.
Exports are pegged at 2.275 bb, down 100 mb from August.
USDA put 2022-23 corn ending stocks at 1.219 bb, down 169 mb from August.
The average farmgate price for the 2022-23 corn crop was bumped up 10 cents a bushel to $6.75 per bushel.
Globally, USDA bumped up 2022-23 beginning stocks .3 million metric tons (mmt) to 312.14 mmt. Global production was lowered 7.03 mmt to 1,172.58 mmt. Global exports were lowered 2.04 mmt. That put ending stocks at 304.53 mmt, down 2.15 mmt.
USDA held pat on Russian corn 15 mmt while lowering the European Union's production 1.2 mmt to 58.8 mmt.
On Ukraine, USDA bumped up production 1.5 mmt to 31.5 mmt and increased exports 1 mmt to 12.7 mmt.
USDA also held pat on its forecast for Brazil's 2021-22 production at 116 mmt. Argentina's production was held at 53 mmt as well.
USDA says farmers will harvest 4.38 bb of soybeans in 2022 with a national average yield of 50.5 bpa. That's 153 mb less than last month's forecast and reflects a 1.4 bpa cut to yield and a half-million-acre revision in planted acreage. Both are toward the low end of pre-report expectations.
USDA lowered ending stocks for 2022-23 to 200 mb. That's 45 mb lower than last month and the lowest level in seven years. To arrive at that estimate, USDA lowered planted acreage to 87.5 million and harvested acreage to 86.6 ma. USDA increased beginning stocks by 15 mb to 240 mb, putting supplies at 4.633 bb.
On the demand side, USDA lowered its crush forecast by 20 mb, cut exports by 70 mb and trimmed residual use by 3 mb. That lowered overall demand to 4.433 mb, resulting in 200 mb of ending stocks and a national average farm gate price of $14.35, unchanged from last month.
For old-crop, 2021-22 ending stocks, USDA sees supplies at 240 mb, reflecting a lower export forecast.
Globally, USDA pegged ending stocks for 2022-23 at 98.92 mmt, which is toward the low end of pre-report expectations and 2.49 mmt from last month. It reflects lower stocks in the U.S and China. Brazil and Argentina's production forecasts for the upcoming crop were left unchanged at 149 mmt and 51 mmt respectively. USDA lowered China's import forecast by 1 mmt to 97 mmt.
Monday's WASDE report once again shared supportive news to the cattle market. Beef production for 2022 was raised by 16 million pounds, as slaughter speeds continue to run relentlessly. The third quarter of 2022 actually saw a 25-million-pound dip in production from last month's report as carcass weights are waning, but the third quarter's drawback was more than offset by the 40-million-pound addition to the fourth quarter. Beef production for 2023 was raised by 70 million pounds, with the first quarter of 2023 being raised by 150 million pounds from August's WASDE report, while the second quarter of 2023 remained unchanged. Steer prices are expected to average $143.00, up $3.00 from last month, for the third quarter in 2022, and fourth quarter prices are unchanged at $147.00. Beef imports for 2022 fell by 45 million pounds and beef exports for 2022 held steady. Beef imports and exports for 2023 were unchanged from August's report.
Monday's WASDE report shared mixed news for the hog complex. Pork production for 2022 gained 55 million pounds from last month's report as pork production in the third quarter is anticipated to be better than originally expected. Disappointing but expected news was shared about quarterly price projections as obviously pressures in the current market have dropped third quarter prices by $6.00 from August's WASDE report, and fourth quarter prices in 2022 are expected to average $65.00, which is down $4.00 from a month ago. Quarterly price projections for 2023 are unchanged from a month ago. Pork imports for 2022 fell by 50 million pounds but pork exports also fell by 80 million pounds. Pork imports for 2023 fell by 100 million pounds and exports remained unchanged.
To view the full report for WASDE click here:
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