PF Report Reaction: Bearish reaction to USDA's reports

Market reaction

Ahead of the report, corn futures were trading around 4 cents lower, soybeans were 10 to 12 cents higher, SRW wheat futures were 6 to 8 cents lower, HRW wheat was 2 to 3 cents higher, HRS wheat was around a penny higher and cotton was near unchanged  

As of 11:30 a.m. CT, corn futures are trading 15 to 16 cents lower, soybeans are 24 to 30 cents lower, winter wheat markets are 18 to 21 cents lower, spring wheat is 11 to 14 cents lower and cotton is around 50 points lower.
 

U.S. wheat production

All wheat: 1.739 billion bu.; trade expected 1.683 billion bu.
— compares with 1.665 billion bu. in June; 1.650 billion bu. in 2022

All winter wheat: 1.206 billion bu.; trade expected 1.146 billion bu.
— compares with 1.136 billion bu. in June; 1.104 billion bu. in 2022

HRW: 577 million bu.; trade expected 532 million bu.
— compares with 525 million bu. in June; 531 million bu. in 2022

SRW: 422 million bu.; trade expected 407 million bu.
— compares with 402 million bu. in June; 337 million bu. in 2022

White winter: 207 million bu.; trade expected 207 million bu.
— compares with 209 million bu. in June; 236 million bu. in 2022

Other spring wheat: 479 million bu.; trade expected 477 million bu.
— compares with 482 million bu. in 2022

Durum wheat: 54 million bu.; trade expected 60 million bu.
— compares with 64 million bu. in 2022

USDA’s first all-wheat production estimate came in 56 million bu. higher than traders expected. The winter wheat crop estimate increased 60 million bu. from last month, with HRW up 45 million bu., SRW up 15 million bu. and white wheat unchanged. USDA’s initial other spring wheat crop estimate was 2 million bu. higher than traders expected, while durum production came in 6 million bu. lower than the average pre-report estimate. USDA estimated the all-wheat yield at 46.1 bu. per acre, up 1.2 bu. from last month’s projection. Harvested area increased 600,000 acres to 37.7 million acres to reflect the June 30 Acreage Report.

U.S. carryover

Corn: 1.402 billion bu. for 2022-23; down from 1.452 billion bu. in June
— 2.262 billion bu. for 2023-24, up from 2.257 billion bu. in June

Beans: 255 million bu. for 2022-23; up from 230 million bu. in June
— 300 million bu. for 2023-24, down from 350 million bu. in June

Wheat: 580 million bu. for 2022-23; down from 598 million bu. in June
— 592 million bu. for 2023-24, up from 562 million bu. in June

Cotton: 3.25 million bales for 2022-23; up from 3.2 million bales in June
— 3.8 million bales for 2023-24, up from 3.5 million bales in June

USDA cut its old-crop corn ending stocks forecast 50 million bu. from last month. All of the changes were to the usage side of the balance sheet. USDA raised feed and residual use 150 million bu. but cut food, seed and industrial use 25 million bu. (all from corn-for-ethanol use) and exports 75 million bushels. USDA left its old-crop cash corn price forecast at $6.60.

USDA raised its new-crop corn ending stocks forecast 5 million bu. from last month. USDA raised planted and harvested acreage to reflect the June 30 Acreage Report. The corn yield projection was cut 4 bu. to 177.5 bu. per acre “based on a weather-adjusted trend, estimated using the 1988-2022 time period, assuming normal planting progress but lowered to reflect extreme dryness during June.” The net result was a 5-million-bu. increase to total supply. USDA made no changes on the demand side of the balance sheet. The average on-farm cash corn price forecast for 2023-24 remained at $4.80.

USDA raised its old-crop soybean ending stocks forecast 25 million bu. from last month. USDA raised total supply 5 million bu. amid a bigger import estimate. USDA cut total use 20 million bu. amid a 20-million-bu. cut to exports, a 5-million-bu. reduction in seed use and a 4-million-bu. increase to residual “use.” USDA left its old-crop average cash soybean price at $14.20.

USDA cut projected new-crop soybean ending stocks 50 million bushels. Total supply was lowered 185 million bu. to reflect the smaller acreage estimate from the June 30 Acreage Report. USDA made no change to its soybean yield projection. USDA cut projected total use 135 million bu., with crush down 10 million bu. and exports down 125 million bu. from last month. USDA raised its 2023-24 soybean cash price forecast by 30 cents from last month to $12.40.

Old-crop wheat ending stocks were set at 580 million bu. via June 1 stocks. USDA trimmed total supply 3 million bu. on smaller imports. Total use was raised 15 million bu., with a 31-million-bu. increase to feed and residual use and a 16-million-bu. cut to exports. USDA trimmed its 2022-23 average cash wheat price by two cents to $8.83.

USDA raised its new-crop wheat ending stocks forecast 30 million bu. from last month amid the bigger crop estimate and a small reduction to imports. Total supply was raised 50 million from last month. On the demand side of the balance sheet, USDA increased projected feed and residual use 20 million bushels. USDA cut its 2023-24 on-farm average cash wheat price forecast by 20 cents to $7.50.

USDA raised its old-crop cotton ending stocks estimate 50,000 bales from last month. It cut exports 100,000 bales and only partially offset that with a 50,000-bale increase to domestic use. USDA left its old-crop cotton cash price forecast at 82.0 cents.

USDA raised projected new-crop cotton ending stocks 300,000 bales from last month. Acreage was adjusted to reflect the June 30 Acreage Report. USDA cut the yield projection by 10 lbs. to 831 lbs. per acre. That resulted in a 50,000-bale increase in total supply. Total use was cut 250,000 bales due to a smaller export projection. USDA lowered its 2023-24 cash cotton price forecast by a penny to 76.0 cents.

Global carryover

Corn: 296.30 MMT for 2022-23; down from 297.55 MMT in June
— 314.12 MMT for 2023-24, up from 313.98 MMT in June

Beans: 102.9 MMT for 2022-23; up from 101.32 MMT in June
— 120.98 MMT for 2023-24, down from 123.34 MMT in June

Wheat: 269.31 MMT for 2022-23; up from 266.66 MMT in June
— 266.53 MMT for 2023-24, down from 270.71 MMT in June

Cotton: 93.95 million bales for 2022-23; up from 92.89 million bales in June
— 94.52 million bales for 2023-24, up from 92.79 million bales in June

Global production highlights

Argentina beans: 25.0 MMT for 2022-23; compares with 25.0 MMT in June
— 48.0 MMT for 2023-24, compares with 48.0 MMT in June

Brazil beans: 156.0 MMT for 2022-23; compares with 156.0 MMT in June
— 163.0 MMT for 2023-24, compares with 163.0 MMT in June

Argentina wheat: 12.55 MMT for 2022-23; compares with 12.55 MMT in June
— 19.5 MMT for 2023-24, compares with 19.5 MMT in June

Australia wheat: 39.69 MMT for 2022-23; compares with 39.0 MMT in June
— 29.0 MMT for 2023-24, compares with 29.0 MMT for June

China wheat: 137.72 MMT for 2022-23; compares with 137.72 MMT in June
— 140.0 MMT for 2023-24; compares with 140.0 MMT in June

Canada wheat: 33.82 MMT for 2022-23; compares with 33.82 MMT in June
— 35.0 MMT for 2023-24, compares with 37.0 MMT in June

EU wheat: 134.34 MMT for 2022-23; compares with 134.34 MMT in June
— 138.0 MMT for 2023-24, compares with 140.5 MMT in June

Russia wheat: 92.0 MMT for 2022-23; compares with 92.0 MMT in June
— 85.0 MMT for 2023-24, compares with 85.0 MMT in June

Ukraine wheat: 21.5 MMT for 2022-23; compares with 20.9 MMT in June
— 17.5 MMT for 2023-24, compares from 17.5 MMT in June

China corn: 277.2 MMT for 2022-23; compares with 277.2 MMT in June
— 280.0 MMT for 2023-24, compares with 280.0 MMT in June

Argentina corn: 34.0 MMT for 2022-23; compares with 35.0 MMT in June
— 54.0 MMT for 2023-24, compares with 54.0 MMT in June

Brazil corn: 133.0 MMT for 2022-23; compares with 132.0 MMT in June
— 129.0 MMT for 2023-24, compares with 129.0 MMT in June

Ukraine corn: 27.0 MMT for 2022-23; compares with 27.0 MMT in June
— 25.0 MMT for 2023-24, compares with 24.5 MMT for June

South Africa corn: 17.0 MMT for 2022-23; compares with 17.0 MMT in June
— 16.8 MMT for 2023-24, compares with 16.8 MMT in June