PF Report Reaction: Soybean market has bullish reaction to sharper-than-expected production cut

( )

Market reaction

Ahead of USDA's reports, corn futures were trading 1 to 2 cents lower, soybeans were 10 to 12 cents higher, wheat futures were 6 to 15 cents lower and cotton was around 160 points higher.

As of 11:30 a.m. CT, corn futures are trading 6 to 8 cents higher, soybeans are 60-plus cents higher, wheat futures are 3 to 11 cents lower and cotton futures are around 30 points lower.

 

U.S. crop production

Corn: 13.944 billion bu.; trade expected 14.088 billion bu.
— compares to 14.359 billion bu. in August; 15.115 billion bu. in 2021

Beans: 4.378 billion bu.; trade expected 4.496 billion bu.
— compares to 4.531 billion bu. in August; 4.435 billion bu. in 2021

Cotton: 13.832 million bales; trade expected 12.770 million bales
— compares to 12.570 million bales in August; 17.52 million bales in 2021

USDA cut its corn crop estimate by 415 million bu. from last month, which was greater than the 271-million-bu. decline traders expected. The national average yield was lowered 2.9 bu. to 172.5 bu. per acre. USDA cut harvested acreage by 996,000 acres from its June estimate.

In the top 12 production states, USDA cut its yield estimate in Indiana (down 3 bu. to 186 bu. per acre), Iowa (down 5 bu. to 200 bu.), Kansas (down 1 bu. to 122 bu.), Michigan (down 2 bu. to 168 bu.), Minnesota (down 3 bu. to 190 bu.), Missouri (down 4 bu. to 149 bu.), Nebraska (down 5 bu. to 176 bu.), North Dakota (down 4 bu. to 141 bu.), Ohio (down 4 bu. to 186 bu.), South Dakota (down 9 bu. to 138 bu.) and Wisconsin (down 2 bu. to 183 bu. per acre). Illinois was the only of those states that had a higher yield estimate (up 1 bu. to 204 bu. per acre) compared with last month.

USDA’s initial objective field data showed the fifth highest number of ears in the 10 survey states.

USDA cut its soybean crop estimate by 153 bu. from last month, whereas traders expected a 35-million-bu. reduction. USDA lowered its national average yield estimate by 1.4 bu. to 50.5 bu. per acre and cut harvested acres by 580,000 acres.

In the top 13 production states, USDA cut its yield estimate in Illinois (down 2 bu. to 64 bu. per acre), Kansas (down 8 bu. to 32 bu.), Missouri (down 2 bu. to 47 bu.), Nebraska (down 3 bu. to 52 bu.), North Dakota (down 1 bu. to 34 bu.), Ohio (down 1 bu. to 56 bu.) and South Dakota (down 2 bu. to 41 bu.). USDA left its yield estimate unchanged in Arkansas (42 bu.), Indiana (60 bu.), Michigan (47 bu.) and Minnesota (50 bu.). USDA raised its yield estimate from last month in Iowa (up 1 bu. to 59 bu.) and Wisconsin (up 1 bu. to 53 bu. per acre).

USDA’s initial objective data showed pod counts down from year-ago in nine of the 11 survey states.

USDA unexpectedly raised it cotton crop estimate by 1.262 million bales from last month. Traders expected a 200,000-bale increase to crop size. USDA increased its harvested acreage estimate by 747,000 acres to 7.129 million acres and cut the yield forecast by 3 lbs. to 843 lbs. per acre. USDA cut its yield estimate for Texas by 18 lbs. to 616 lbs. per acre. The Georgia yield estimate was cut 28 lbs. to 900 lbs. per acre.

 

 

U.S. carryover

Corn: 1.525 billion bu. for 2021-22; down from 1.530 billion bu. in August
— 1.219 billion bu. for 2022-23; down from 1.388 billion bu. in August

Beans: 240 million bu. for 2021-22; up from 225 million bu. in August
— 200 million bu. for 2022-23; down from 245 million bu. in August

Wheat: 610 million bu. for 2022-23; unchanged from 610 million bu. in August

Cotton: 3.75 million bales for 2021-22; up from 3.5 million bales in August
— 2.7 million bales for 2022-23; up from 1.8 million bales in August

USDA cut old-crop corn carryover 5 million bu. from last month, which came in 22 million bu. below the average pre-report trade estimate. USDA cut estimated food, seed & industrial use 20 million bu. (to 6.775 billion) and increased estimated exports 25 million bu. to 2.475 billion bushels. USDA puts the national average on-farm cash corn price for 2021-22 at $5.95, unchanged from last month.

For 2022-23 corn, USDA cut total supplies 419 million bu. due to the slight cut to beginning stocks and the smaller corn crop estimate. Total use was cut 250 million bu. from last month. USDA now projects feed & residual use at 5.225 billion bu. (down 100 million bu. from last month), FSI use at 6.775 billion bu. (down 50 million – all of that cut came out of corn-for-ethanol, which is now put at 5.325 billion bu.) and exports at 2.275 billion bu. (down 100 million from last month). Carryover is down 169 million bu. from last month but is 2 million bu. above the average pre-report trade estimate. USDA puts the national average on-farm cash corn price for 2022-23 at $6.75, up a dime from August.

Old-crop soybean carryover is up 15 million bu. from last month and is 4 million bu. above the average pre-report trade estimate. USDA cut 15 million bu. from estimated exports (to 2.145 billion bu.) to account for the increase in carryover. USDA puts the national average on-farm cash soybean price for 2021-22 at $13.30, unchanged from last month.

For 2022-23 soybeans, USDA cut total supplies 138 million bu., with the increase in beginning stocks more than offset by the smaller bean crop estimate. Total use was cut 93 million bu. from last month. USDA now puts soybean crushings at 2.225 billion bu. (down 20 million from last month), exports at 2.085 billion bu. (down 70 million) and residual use at 21 million bu. (down 3 million from last month). Carryover at 200 million bu. is down 45 million from last month and is 47 million bu. below the average pre-report trade estimate. USDA puts the national average on-farm cash bean price for 2022-23 at $14.35, unchanged from last month.

USDA made no changes to the supply- or demand-side of the 2022-23 wheat balance sheet, leaving projected carryover at 610 million bushels. That is 8 million bu. below the average pre-report trade estimate. USDA puts the national average on-farm cash wheat price for 2022-23 at $9.00, down 25 cents from last month.

Old-crop cotton carryover is up 250,000 bales from last month. Estimated exports were cut 30,000 bales (to 14.62 million) and unaccounted use was cut 220,000 bales (to a negative-240,000 bales). The national average on-farm cash cotton price for 2021-22 is put at 92 cents, unchanged from last month.

For 2022-23 cotton, total supplies are up 1.51 million bales the result of the increase to beginning stocks and the bigger cotton crop estimate. On the demand-side, USDA increased estimated exports 600,000 bales (to 12.6 million) and added 20,000 bales to unaccounted use (to a negative-10,000 bales). Carryover for 2022-23 is up 900,000 million bales from last month and is 840,000 bales above the average pre-report trade guess. USDA puts the national average on-farm cash cotton price for 2022-23 at 96 cents, down a penny from last month.

 

Global carryover

Corn: 312.14 MMT for 2021-22; up from 311.84 MMT in August
— 304.53 MMT for 2022-23; down from 306.68 MMT in August

Beans: 89.70 MMT for 2021-22; down from 89.73 MMT in August
— 101.41 MMT for 2022-23; unchanged from 101.41 MMT in August

Wheat: 275.67 MMT for 2021-22; down from 276.35 MMT in August
— 268.57 MMT for 2022-23; up from 267.34 MMT in August

Cotton: 84.79 million bales for 2021-22; up from 84.72 million bales in August
— 84.75 million bales for 2022-23; up from 82.77 million bales in August

 

 

Global production highlights

Argentina beans: 44.0 MMT for 2021-22; compares with 44.0 MMT in August
— projection of 51.0 MMT for 2022-23; compares with 51.0 MMT in August

Brazil beans: 126.0 MMT for 2021-22; compares with 126.0 MMT in August
— projection of 149.0 MMT for 2022-23; compares with 149.0 MMT in August

Argentina wheat: 22.50 MMT for 2021-22; compares with 22.50 MMT in August
— projection of 19.0 MMT for 2022-23; compares with 19.0 MMT in August

Australia wheat: 36.35 MMT for 2021-22; compares with 36.3 MMT in August
— projection of 33.0 MMT for 2022-23; compares with 33.0 MMT in August

China wheat: 136.95 MMT for 2021-22; compares with 136.95 MMT in August
— projection of 138.0 MMT for 2022-23; compares with 138.0 MMT in August

Canada wheat: 22.3 MMT for 2021-22; compares with 21.65 MMT in August
— projection of 35.0 MMT for 2022-23; compares with 35.0 MMT in August

EU wheat: 138.29 MMT for 2021-22; compares with 138.29 MMT in August
— projection of 132.1 MMT for 2022-23; compares with 132.1 MMT in August

Russia wheat: 75.16 MMT for 2021-22; compares with 75.16 MMT in August
— projection of 91.0 MMT for 2022-23; compares with 88.0 MMT in August

Ukraine wheat: 33.01 MMT for 2021-22; compares with 33.01 MMT in August
— projection of 20.5 MMT for 2022-23; compares with 19.5 MMT in August

China corn: 272.55 MMT for 2021-22; compares with 272.55 MMT in August
— projection of 274.0 MMT for 2022-23; compares with 271.0 MMT in August

Argentina corn: 53.0 MMT for 2021-22; compares with 53.0 MMT in August
— projection of 55.0 MMT for 2022-23; compares with 55.0 MMT in August

Brazil corn: 116.0 MMT for 2021-22; compares with 116.0 MMT in August
— projection of 126.0 MMT for 2022-23; compares with 126.0 MMT in August

Ukraine corn: 42.13 MMT for 2021-22; compares with 42.13 MMT in August
— projection of 31.5 MMT for 2022-23; compares with 30.0 MMT in August

South Africa corn: 16.3 MMT for 2021-22; compares with 16.3 MMT in August
— projection of 17.3 MMT for 2022-23; compares with 17.3 MMT in August

China cotton: 27.0 million bales for 2021-22; compares with 27.0 million bales in August
— projection of 28.0 million bales for 2022-23; compares with 27.5 MMT in August

 

Latest News

First Thing Today | March 28, 2024
First Thing Today | March 28, 2024

Corn, soybeans and wheat traded in narrow ranges during the overnight session ahead of USDA’s reports later this morning.

After the Bell | March 27, 2024
After the Bell | March 27, 2024

After the Bell | March 27, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

Market Watch | March 27, 2024
Market Watch | March 27, 2024

Cash cattle prices soar to all-time high.

Baltimore Bridge Collapse: Limited Impact on Trade Basis Channel Reopening Timeline
Baltimore Bridge Collapse: Limited Impact on Trade Basis Channel Reopening Timeline

RFK Jr. VP | Dairy cattle bird flu update | John Deere layoffs | Dollar/yen exchange rate 34-year high

Ahead of the Open | March 27, 2024
Ahead of the Open | March 27, 2024

Corn and soybeans each favored the downside overnight, with corn leading the way lower. Wheat showed relative strength and went into the break near unchanged.