PF Report Reaction: USDA's August crop estimates lower than expected

Market reaction

Ahead of the report, corn futures were trading a penny higher, soybeans were around a dime lower, winter wheat futures were 5 to 7 cents lower, spring wheat was 1 to 3 cents lower and cotton was 60 points lower.

As of 11:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 2 to 3 cents higher, winter wheat is 3 to 7 cents lower, spring wheat is a penny higher and cotton is 200-plus points higher.
 

U.S. crop production

Corn: 15.111 billion bu.; trade expected 15.135 billion bu.
— compares to 15.320 billion bu. projected in July; 13.730 billion bu. in 2022

Beans: 4.205 billion bu.; trade expected 4.246 billion bu.
— compares to 4.300 billion bu. projected in July; 4.276 billion bu. in 2022

Cotton: 13.922 million bales; trade expected 15.78 million bales
— compares to 16.50 million bales projected in July; 14.47 million bales in 2022

All wheat: 1.734 billion bu.; trade expected 1.739 billion bu.
— compares with 1.739 billion bu. in July; 1.650 billion bu. in 2022

All winter wheat: 1.227 billion bu.; trade expected 1.209 billion bu.
— compares with 1.206 billion bu. in July; 1.104 billion bu. in 2022

HRW: 585 million bu.; trade expected 578 million bu.
— compares with 577 million bu. in July; 531 million bu. in 2022

SRW: 440 million bu.; trade expected 425 million bu.
— compares with 422 million bu. in July; 337 million bu. in 2022

White winter: 202 million bu.; trade expected 206 million bu.
— compares with 207 million bu. in July; 236 million bu. in 2022

Other spring wheat: 450 million bu.; trade expected 477 million bu.
— compares with 479 million bu. in July; 482 million bu. in 2022

Durum wheat: 57 million bu.; trade expected 55 million bu.
— compares with 54 million bu. in July; 64 million bu. in 2022

USDA’s initial corn crop estimate came in 24 million bu. below the average pre-report estimate and 209 million bu. less than the July projection. USDA estimated the yield at 175.1 bu. per acre, 6.4 bu. below trendline. Harvested area was unchanged from the June estimate of 86.322 million acres.

Across the Corn Belt, USDA estimates yields at 201 bu. per acre in Illinois, 195 bu. in Indiana, 203 bu. in Iowa, 124 bu. in Kansas, 170 bu. in Michigan, 183 bu. in Minnesota, 143 bu. in Missouri, 184 bu. in Nebraska, 130 bu. in North Dakota, 191 bu. in Ohio, 145 bu. in South Dakota and 166 bu. in Wisconsin. The Indiana yield would be a record for the state.

USDA’s initial soybean crop estimate came in 41 million bu. lower than anticipated and 95 million bu. less than the July projection. USDA estimated the yield at 50.9 bu. per acre, 1.1 bu. below trendline. Harvested area was unchanged from the June estimate at 82.696 million acres.

In the top 13 production states, USDA estimates yield at 53 bu. per acre in Arkansas, 62 bu. in Illinois, 60 bu. in Indiana, 58 bu. in Iowa, 35 bu. in Kansas, 46 bu. in Michigan, 49 bu. in Minnesota, 45 bu. in Missouri, 58 bu. in Nebraska, 33 bu. in North Dakota, 57 bu. in Ohio, 42 bu. in South Dakota and 50 bu. in Wisconsin. USDA forecasts record soybean yields in Arkansas, Indiana, Mississippi, North Carolina, Ohio and South Carolina.

USDA cut its all-wheat production estimate 5 million bu. from last month. HRW production increased 7 million bu., SRW increased 17 million bu., white winter declined 4 million bu., other spring wheat dropped 27 million bu. and durum increased 2 million bu. from last month. The all-wheat yield estimate of 45.8 bu. per acre declined 0.3 bu. from last month. USDA raised harvested area 150,000 acres.

USDA’s initial cotton crop estimate came in 1.858 million bales below the average pre-report estimate. USDA cut harvested acres 906,000 from last month and lowered the yield 52 lbs. to 779 lbs. per acre.

U.S. carryover

Corn: 1.457 billion bu. for 2022-23; up from 1.402 billion bu. in July
— 2.202 billion bu. for 2023-24, down from 2.262 billion bu. in July

Beans: 260 million bu. for 2022-23; up from 255 million bu. in July
— 245 million bu. for 2023-24, down from 300 million bu. in July

Wheat: 615 million bu. for 2023-24, up from 592 million bu. in July

Cotton: 3.7 million bales for 2022-23; up from 3.25 million bales in July
— 3.1 million bales for 2023-24, down from 3.8 million bales in July

Old-crop corn carryover is up 55 million bu. from July and 47 million bu. above the average pre-report trade estimate. On the supply-side of the 2022-23 balance sheet, USDA raised total supplies 10 million bu. on an increase to estimated imports (to 35 million bushels). On the demand-side, USDA cut total old-crop use 45 million bushels. Feed and Residual use was unchanged from last month at 5.425 billion bu., Food, Seed & Industrial (FSI) use was trimmed 20 million bu. to 6.635 billion bu. (corn-for-ethanol was unchanged at 5.225 billion bu.) and estimated exports were cut 25 million bu. to 1.625 billion bushels. USDA puts the national average on-farm cash corn price for 2022-23 at $6.60, unchanged from last month.

New-crop corn carryover is down 60 million bu. from July but 34 million bu. above the average trade estimate. Total 2023-24 supplies are down 155 million bu. from last week with the bigger beginning stocks more than offset by the 209-million-bu. cut to the 2023 corn crop. Total new-crop use was also cut 95 million bu. from last month. Expected Feed and Residual use was cut 25 million bu. to 5.625 billion bu., Food Seed and Industrial use was cut 20 million bu. to 6.715 billion (corn-for-ethanol was unchanged at 5.3 billion bu.) and expected new-crop exports were cut 50 million bu. to 2.05 billion bushels. USDA puts the national average on-farm cash corn price for 2023-24 at $4.90, up a dime from last month.

Old-crop soybean carryover is up 5 million bu. from last month and 9 million bu. above the average pre-report trade estimate. Total supplies for 2022-23 are up 5 million bu. from last month due to an increase in estimated imports. There were no changes to the old-crop demand estimates with crush unchanged at 2.2 billion bu. and exports at 1.98 billion bushels. USDA puts the national average on-farm cash bean price for 2022-23 at $14.20, unchanged from last month.

New-crop soybean carryover is down 55 million bu. from last month and 22 million bu. below the average pre-report trade estimate. Total supplies are down 79 million bu. from last month with the bigger beginning stocks more than offset by a 95-million-bu. cut to the 2023 bean crop estimate. USDA also increased projected 2023-24 bean imports 10 million bu. (to 30 million bushels). On the demand-side of the 2023-24 balance sheet, USDA cut total use 25 million bu. on lower projected exports (to 1.825 billion bushels). USDA puts the national average on-farm cash bean price for 2023-24 at $12.70, up 30 cents from last month.

Wheat carryover for 2023-24 is up 23 million bu. from last month and 17 million bu. above the average pre-report trade estimate. Total supplies are down 5 million bu. from last month amid a cut to the 2023 wheat crop. USDA cut demand 28 million bu. from July with food use down 3 million bu. (to 974 million bu.) and exports down 25 million bu. (to 700 million bushels). USDA puts the national average on-farm cash wheat price for 2023-24 at $7.50, unchanged from last month.

Old-crop cotton carryover at 3.7 million bales us up 450,000 bales from last month. USDA made no change to the 2022-23 supply. On the demand side, Domestic use was unchanged at 2.05 million bales. Exports were cut 100,000 bales and “unaccounted” use was cut 350,000 bales (to negative 330,000 bales in August from positive 20,000 bales in July). The national average on-farm cash cotton price for 2022-23 was unchanged from last month at 82 cents.

New-crop cotton carryover was cut 700,000 bales from last month. Total supplies for 2023-24 were lowered 2.06 million bales from last month with the bigger beginning stocks more than offset by a 2.51-million-bale cut to the 2023 crop. Domestic new-crop cotton use was trimmed 50,000 bales to 2.15 million bales and projected exports were slashed 1.25 million bales to 12.50 million bales. USDA puts the national average on-farm cash cotton price for 2023-24 at 79 cents, up 3 cents from last month.

Global carryover

Corn: 297.92 MMT for 2022-23; up from 296.30 MMT in July
— 311.05 MMT for 2023-24, down from 314.12 MMT in July

Beans: 103.09 MMT for 2022-23; up from 102.90 MMT in July
— 119.40 MMT for 2023-24, down from 120.98 MMT in July

Wheat: 268.31 MMT for 2022-23; down from 269.31 MMT in July
— 265.61 MMT for 2023-24, down from 266.53 MMT in July

Cotton: 94.13 million bales for 2022-23; up from 93.95 million bales in July
— 91.60 million bales for 2023-24, down from 94.52 million bales in July

Global production highlights

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

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

Argentina wheat: 12.55 MMT for 2022-23; compares with 12.55 MMT in July
— 17.5 MMT for 2023-24, compares with 17.5 MMT in July

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

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

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

EU wheat: 134.14 MMT for 2022-23; compares with 134.34 MMT in July
— 135.0 MMT for 2023-24, compares with 138.0 MMT in July

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

Ukraine wheat: 21.5 MMT for 2022-23; compares with 21.5 MMT in July
— 21.0 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
— 277.0 MMT for 2023-24, compares with 280.0 MMT in July

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

Brazil corn: 135.0 MMT for 2022-23; compares with 133.0 MMT in July
— 129.0 MMT for 2023-24, compares with 129.0 MMT in July

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

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