PF Report Reaction: Bullish reaction to USDA's October crop reports

Market reaction

Ahead of the report, corn futures were trading 4 to 5 cents lower, soybeans were 1 to 3 cents higher, wheat futures were mostly 3 to 8 cents lower and cotton was 70 to 80 points lower.

As of 11:45 a.m. CT, corn futures are trading 5 to 6 cents higher, soybeans are 36 to 41 cents higher, SRW wheat futures are mostly 7 to 13 cents higher, HRW wheat is 6 to 7 cents higher, HRS wheat is 4 to 5 cents higher and cotton is trading around 20 points higher.  
 

U.S. crop production

Corn: 15.064 billion bu.; trade expected 15.101 billion bu.
— compares to 15.134 billion bu. in August; 13.730 billion bu. in 2022

Beans: 4.104 billion bu.; trade expected 4.134 billion bu.
— compares to 4.146 billion bu. in August; 4.276 billion bu. in 2022

Cotton: 12.817 million bales; trade expected 12.91 million bales
— compares to 13.132 million bales in August; 14.47 million bales in 2022

USDA cut its corn production estimate 70 million bu. from last month, which was 37 million bu. more than traders expected. It lowered yield 0.8 bu. to 173.0 bu. per acre and left harvested area unchanged at 87.096 million acres.

Across the Corn Belt, USDA cut corn yields in Iowa (down 1 bu. to 199 bu. per acre), Kansas (down 5 bu. to 122 bu.), Michigan (down 3 bu. to 170 bu.), Minnesota (down 1 bu. to 179 bu.), Missouri (down 4 bu. to 141 bu.), Nebraska (down 3 bu. to 174 bu.) and North Dakota (down 2 bu. to 136 bu.). USDA left yields unchanged in Ohio (195 bu. per acre) and Wisconsin (165 bu.). USDA raised its yield estimate in Illinois (up 2 bu. to 200 bu. per acre), Indiana (up 3 bu. to 197 bu.) and South Dakota (up 1 bu. to 147 bu.).

USDA cut its soybean production estimate 42 million bu., which was 30 million bu. more than traders expected. It lowered the national average yield 0.5 bu. to 49.6 bu. per acre and left harvested area unchanged at 82.791 million acres.

Of the top 13 production states, USDA cut soybean yields in Kansas (down 3 bu. to 26 bu. per acre), Michigan (down 3 bu. to 46 bu.), Nebraska (down 1 bu. to 54 bu.), Ohio (down 1 bu. to 57 bu.) and Wisconsin (down 2 bu. to 44 bu.). USDA left yields unchanged in Arkansas (53 bu. per acre), Illinois (61 bu.), Iowa (58 bu.), Minnesota (48 bu.), Missouri (45 bu.), North Dakota (33 bu.) and South Dakota (43 bu.). USDA raised its yield estimate in Indiana (up 1 bu. to 61 bu. per acre).

USDA lowered its cotton crop estimate 315,000 bales from last month, which was 93,000 bales more than traders expected. It cut yield 19 lbs. to 767 lbs. per acre and left harvested area unchanged at 8.021 million acres.

USDA cut the Texas yield 55 lbs. to 570 lbs. per acre.

U.S. carryover

Corn: 1.361 billion bu. for 2022-23; down from 1.452 billion bu. in September
— 2.111 billion bu. for 2023-24, down from 2.221 billion bu. in September

Beans: 268 million bu. for 2022-23; up from 250 million bu. in September
— 220 million bu. for 2023-24, unchanged from 220 million bu. in September

Wheat: 670 million bu. for 2023-24, up from 615 million bu. in September

Cotton: 4.25 million bales for 2022-23; unchanged from 4.25 million bales in September
— 2.8 million bales for 2023-24, down from 3.0 million bales in September

Old-crop corn carryover of 1.361 was set by the Quarterly Grain Stocks Report as of Sept. 1 and is down 91 million bu. from the September Supply & Demand Report. USDA increased the 2022 national average corn yield to 173.4 bushel per acre, but lower harvested acres resulted in a 17-million-bu. cut to last year’s corn crop that now stands at 15.130 billion bushels. Old-crop feed & residual use was increased 124 million bu. to 5.549 billion. Food, seed & industrial corn use for last year was cut 46 million bu. to 6.559 billion (that includes an 18-million-bu. cut to estimated corn-for-ethanol use which stands at 5.177 billion bushels). Estimated 2022-23 corn exports were trimmed 4 million bu. from last month to 1.661 billion bushels. USDA puts the national average on-farm cash corn price for 2022-23 at $6.54, down a penny from last month.

New-crop corn carryover of 2.111 billion bu. is down 110 million bu. from last month and 27 million bu. below the average pre-report trade estimate. The drop is due to the cut to beginning stocks and a 70-million-bu. cut to the estimated 2023 corn crop. On the demand side of the balance sheet, USDA cut projected feed & residual 25 million bu. (to 5.6 billion), left food, seed & industrial use at 6.715 billion bu. (including unchanged corn-for-ethanol use of 5.3 billion) and cut 2023-24 corn exports 25 million bu. (to 2.025 billion). USDA projects the national average on-farm cash corn price for 2023-24 at $4.95, up a nickel from last month.

Old-crop soybean carryover of 268 million bu. was set by the Quarterly Grain Stocks Report and is up 18 million bu. from the September S&D Report. USDA cut harvested bean acres for 2022 and raised last year’s bean yield to 49.6 bu. per acre, up 0.1 bu. from last month. The 2022 bean crop is put at 4.270 billion bu., down 6 million bu. from last month. USDA cut old-crop bean imports 5 million bu. to 25 million bu. to drop total old-crop supplies 12 million bu. from last month. On the demand side of the old-crop balance sheet, USDA cut crush 8 million bu. (to 2.212 billion), increased exports 2 million bu. (to 1.992 billion) and cut residual use 23 million bu. (to zero). USDA puts the national average on-farm cash soybean price for 2022-23 at $14.20, unchanged from last month.

New-crop soybean carryover of 220 million bu. is unchanged from last month and 13 million bu. below the average pre-report trade estimate. Total supplies for 2023-24 were cut 23 million bu. (estimated at 4.403 billion bu.) due to the 18-million-bu. increase in beginning stocks and a 42-million-bu. cut to the 2023 bean crop estimate. On the demand-side of the new-crop balance sheet, USDA increased crush 10 million bu. (to 2.3 billion), cut exports 35 million bu. (to 1.755 billion) and raised residual use 2 million bu. (to 27 million). USDA puts the national average on-farm cash soybean price for 2023-24 at $12.90, unchanged from last month.

Wheat carryover for 2023-24 is put at 670 million bu., up 55 million bu. from last month and 23 million bu. above the average pre-report trade estimate. Beginning stocks of wheat are up 2 million bu. from last month. USDA cut estimated old-crop seed use 1 million bu. from September (now at 68 million bu.) and cut last year’s estimated feed & residual use 1 million bu. (to 89 million). The big change on the supply side of the balance sheet came in last month’s Annual Small Grains Summary in the form of a 78-million-bu. increase in the 2023 wheat crop. On the demand side, USDA left food use unchanged from last month (974 million bu.), left seed use unchanged (65 million), increased feed & residual use 30 million bu. (to 120 million) and left exports unchanged (700 million bushels). USDA puts the national average on-farm cash wheat price for 2023-24 at $7.30, down 20 cents from last month.

USDA made no changes to the supply- or demand-side of the old-crop cotton balance sheet. USDA now puts the national average on-farm cash cotton price for 2022-23 at 84.8 cents, up 2.8 cents from September.

New-crop cotton carryover of 2.8 million bales is down 200,000 bales from last month. New-crop cotton total supplies are projected down 320,000 bales due to the smaller 2023 cotton crop estimate. Domestic cotton use is forecast at 2.15 million bales (unchanged from September) and cotton exports are put at 12.2 million bales (down 100,000 bales from last month). Unaccounted use was also trimmed 20,000 bales (to -80,000 bales). USDA puts the national average on-farm cash cotton price for 2023-24 at 80 cents, unchanged from last month.

Global carryover

Corn: 298.13 MMT for 2022-23; down from 299.47 MMT in September
— 312.40 MMT for 2023-24, down from 313.99 MMT in September

Beans: 101.89 MMT for 2022-23; down from 102.99 MMT in September
— 115.62 MMT for 2023-24, down from 119.25 MMT in September

Wheat: 267.55 MMT for 2022-23; up from 267.13 MMT in September
— 258.13 MMT for 2023-24, down from 258.61 MMT in September

Cotton: 82.84 million bales for 2022-23; down from 93.18 million bales in September
— 79.92 million bales for 2023-24, down from 89.96 million bales in September

Global production highlights

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

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

Argentina wheat: 12.55 MMT for 2022-23; compares with 12.55 MMT in September
— 16.5 MMT for 2023-24, compares with 16.5 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 26.0 MMT for September

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

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

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

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

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

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

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

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

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

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