PF Report Reaction: Corn acreage increase more than offsets cut to yield

Market reaction

Ahead of the report, corn futures were trading around a nickel lower, soybeans were 11 to 14 cents lower, winter wheat futures were 6 to 8 cents lower, spring wheat was 1 to 2 cents lower and cotton futures were modestly weaker.

As of 11:40 a.m. CT, corn futures are trading mostly 9 cents lower, soybeans are 17 to 19 cents lower, SRW wheat futures are a penny higher, HRW wheat is mostly 6 cents higher, HRS wheat is 7 to 9 cents higher and cotton is around 30 points higher.
 

U.S. crop production

Corn: 15.134 billion bu.; trade expected 15.008 billion bu.
— compares to 15.111 billion bu. in August; 13.730 billion bu. in 2022

Beans: 4.146 billion bu.; trade expected 4.157 billion bu.
— compares to 4.205 billion bu. in August; 4.276 billion bu. in 2022

Cotton: 13.132 million bales; trade expected 13.57 million bales
— compares to 13.922 million bales in August; 14.47 million bales in 2022

USDA raised its corn crop estimate 23 million bu. from last month, whereas traders expected a 103-million-bu. reduction. The national average yield was cut 1.3 bu. from last month to 173.8 bu. per acre. But harvested acres increased 774,000 acres to 87.096, more than offsetting the cut to yield. USDA’s  corn objective yield data indicated the highest number of ears on record for the combined objective yield states (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin). Record yields are forecast in Ohio and South Carolina.

Compared to last month, USDA lowered yields in Illinois (down 3 bu. to 198 bu. per acre), Indiana (down 1 bu. to 194 bu.), Iowa (down 3 bu. to 200 bu.), Minnesota (down 3 bu. to 180 bu.), Nebraska (down 7 bu. to 177 bu.) and Wisconsin (down 1 bu. to 165 bu.). USDA raised yields in Kansas (up 3 bu. to 127 bu.), Michigan (up 3 bu. to 173 bu.), Missouri (up 2 bu. to 145 bu.), North Dakota (up 8 bu. to 138 bu.), Ohio (up 4 bu. to 195 bu.) and South Dakota (up 1 bu. to 146 bu.).

USDA lowered its soybean crop estimate 59 million bu. from last month, whereas traders expected a 48-million-bu. cut. The yield was cut 0.8 bu. to 50.1 bu. per acre. USDA raised harvested area by 95,000 acres to 82.791 million acres. Record yields are forecast in Arkansas, Indiana, Kentucky, Mississippi, New York, Ohio and Tennessee.

Compared to last month, USDA cut yields in Illinois (down 1 bu. to 61 bu. per acre), Kansas (down 6 bu. to 29 bu.), Minnesota (down 1 bu. to 48 bu.), Nebraska (down 3 bu. to 55 bu.) and Wisconsin (down 4 bu. to 46 bu.). USDA left yields unchanged in Arkansas (53 bu.), Indiana (60 bu.), Iowa (58 bu.), Missouri (45 bu.) and North Dakota (33 bu.). USDA raised yields in Michigan (up 3 bu. to 49 bu.), Ohio (up 1 bu. to 58 bu.) and South Dakota (up 1 bu. to 43 bu.).

USDA cut its cotton crop estimate 860,000 bales from last month, which was more than double the decline traders anticipated. The national average yield increased 7 lbs. to 786 lbs. per acre. But USDA cut harvested acreage by 603,000 acres, including 340,000 acres in Texas and 80,000 acres in Georgia.

U.S. carryover

Corn: 1.452 billion bu. for 2022-23; down from 1.457 billion bu. in August
— 2.221 billion bu. for 2023-24, up from 2.202 billion bu. in August

Beans: 250 million bu. for 2022-23; down from 260 million bu. in August
— 220 million bu. for 2023-24, down from 245 million bu. in August

Wheat: 615 million bu. for 2023-24, unchanged from 615 million bu. in August

Cotton: 4.25 million bales for 2022-23; up from 3.7 million bales in August
— 3.0 million bales for 2023-24, down from 3.1 million bales in August

USDA trimmed old-crop corn ending stocks 5 million bu. from last month. On the supply side, USDA raised imports by 5 million bushels. On the demand side of the old-crop balance sheet, USDA cut food, seed and industrial use 30 million bu., with all of the reduction in corn-for-ethanol use. Old-crop exports were raised 40 million bu. from last month. USDA lowered the 2022-23 national average cash price by a nickel to $6.55.

New-crop corn ending stocks increased 19 million bu. from last month due to the increases in beginning stocks and the crop estimate. USDA made no changes to the demand side of the 2023-24 balance sheet. USDA kept its 2023-24 national average cash price projection at $4.90.

USDA cut old-crop soybean ending stocks 10 million bu. from last month. The only change was a 10-million-bu. increase to old-crop exports.

USDA cut projected 2023-24 soybean ending stocks 25 million bu. from last month. Total supply was reduced 70 million bu. on the smaller beginning stocks and crop estimate. On the demand side of the balance sheet, USDA cut total use 45 million bu., with projected crush down 10 million bu. and exports down 35 million bu. from last month. USDA raised its 2023-24 projected national average cash price by 20 cents from last month to $12.90.

USDA kept its 2023-24 wheat ending stocks projection unchanged from last month as it made no changes to either the supply or demand side of the balance sheet. The 2023-24 national average cash price forecast remained at $7.50.

USDA raised old-crop cotton ending stocks 550,000 bales from last month. It hiked total supply 300,000 bales amid an increase to beginning stocks (2021-22 carryover). Old-crop exports were trimmed 30,000 bales, while unaccounted use was cut 220,000 bales. USDA kept its old-crop cash cotton price at 82 cents.

USDA cut new-crop cotton ending stocks by 100,000 bales. On the supply side, bigger beginning stocks were more than offset by the smaller crop estimate, lowering total supply 310,000 bales. On the demand side of the balance sheet, USDA cut exports 200,000 bales and unaccounted use 10,000 bales. USDA raised its 2023-24 national average cash cotton price projection by a penny to 80 cents.

Global carryover

Corn: 299.47 MMT for 2022-23; up from 297.92 MMT in August
— 313.99 MMT for 2023-24, up from 311.05 MMT in August

Beans: 102.99 MMT for 2022-23; down from 103.09 MMT in August
— 119.25 MMT for 2023-24, down from 119.40 MMT in August

Wheat: 267.13 MMT for 2022-23; down from 268.31 MMT in August
— 258.61 MMT for 2023-24, down from 265.61 MMT in August

Cotton: 93.18 million bales for 2022-23; down from 94.13 million bales in August
— 89.96 million bales for 2023-24, down from 91.60 million bales in August

Global production highlights

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

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

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

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

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

Canada wheat: 34.34 MMT for 2022-23; compares with 33.82 MMT in August
— 31.0 MMT for 2023-24, compares with 33.0 MMT in August

EU wheat: 134.19 MMT for 2022-23; compares with 134.14 MMT in August
— 134.0 MMT for 2023-24, compares with 135.0 MMT in August

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

Ukraine wheat: 21.5 MMT for 2022-23; compares with 21.5 MMT in August
— 22.5 MMT for 2023-24, compares from 21.0 MMT in August

China corn: 277.2 MMT for 2022-23; compares with 277.2 MMT in August
— 277.0 MMT for 2023-24, compares with 277.0 MMT in August

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

Brazil corn: 137.0 MMT for 2022-23; compares with 135.0 MMT in August
— 129.0 MMT for 2023-24, compares with 129.0 MMT in August

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

South Africa corn: 17.1 MMT for 2022-23; compares with 17.0 MMT in August
— 16.8 MMT for 2023-24, compares with 16.8 MMT in August