PF Report Reaction: U.S., global wheat ending stocks unexpectedly increased
Market reaction
Ahead of USDA's reports, May futures were trading around 6 cents lower in corn, 10 cents higher in soybeans, 85 cents lower in SRW, 80 cents lower in HRW wheat, 54 cents lower in HRS wheat and near unchanged in cotton.
As of 11:30 a.m. CT, May contracts are trading 14 cents lower in corn, 7 cents lower in soybeans, 85 cents (limit) lower in SRW and HRW wheat, 60 cents (limit) lower in HRS wheat and near unchanged in cotton.
Russia/Ukraine impact on WASDE Report... USDA included the following message at the top of this month’s report: “NOTE: Russia’s recent military action in Ukraine significantly increased the uncertainty of agricultural supply and demand conditions in the region and globally. The March WASDE represents an initial assessment of the short-term impacts as a result of this action.
U.S. carryover
Corn: 1.440 billion bu. for 2021-22; down from 1.540 billion bu. in February
Beans: 285 million bu. for 2021-22; down from 325 million bu. in February
Wheat: 653 million bu. for 2021-22; up from 648 million bu. in February
Cotton: 3.5 million bales for 2021-22; unchanged from 3.5 million bales in February
USDA cut its 2021-22 corn ending stocks forecast by 100 million bu. from last month to 1.440 billion bu., which was 39 million bu. lower than the average pre-report trade estimate but right in line with our forecast. As expected, USDA made no changes to the supply side of the balance sheet. On the demand side, it increased food, seed and industrial use by 25 million bu. (to 6.785 billion bu.), with all of that increase in corn-for-ethanol use (5.350 billion bu.), and raised projected exports by 75 million bu. (to 2.5 billion bu.), “reflecting expectations of sharply lower exports from Ukraine.” USDA raised its national average on-farm cash corn price for 2021-22 by 20 cents from last month to $5.65. The cash price is now projected to rise $1.12 from 2020-21.
USDA cut its 2021-22 soybean ending stocks projection by 40 million bu. from last month to 285 million bu., which was 7 million bu. above the average trade estimate and 75 million bu. above our forecast. USDA made no changes to the supply side of the balance sheet. On the demand side, it raised exports by 40 million bu. to 2.090 billion bu. due to reduced production and exports from South America. USDA also lowered residual use by 1 million bushels. USDA left its crush forecast at a record 2.215 billion bushels. The national average on-farm cash soybean price for 2021-22 was increased by 25 cents from last month to $13.25, which would be up $2.45 from last year.
USDA unexpectedly raised its 2021-22 wheat ending stocks projection by 5 million bu. from last month, whereas traders anticipated a 20-million-bu. reduction. USDA lowered total supply by 5 million bu. on reduced imports. On the demand side of the balance sheet, USDA cut projected exports by 10 million bu. to 800 million bushels. While the export pace has been lagging, we expect the U.S. to pick up some lost business out of the Black Sea region due to the war and anticipate USDA will eventually raise its export forecast. USDA raised its national average on-farm cash wheat price for 2021-22 by 20 cents from last month to $7.50, which would be up $2.45 from 2020-21.
USDA kept its cotton ending stocks projection unchanged from last month at 3.5 million bales. In fact, it made no changes to the old-crop balance sheet. USDA continues to project the 2021-22 national average on-farm cash cotton price at 90 cents, which would be up 23.7 cents from last year.
Global carryover
Corn: 300.97 MMT for 2021-22; down from 302.22 MMT in February
— compares with 291.45 MMT in 2020-21
Beans: 89.96 MMT for 2021-22; down from 92.83 MMT in February
— compares with 101.74 MMT in 2020-21
Wheat: 281.51 MMT for 2021-22; up from 278.21 MMT in February
— compares with 290.27 MMT in 2020-21
Cotton: 82.57 million bales for 2021-22; down from 84.31 million bales in February
— compares with 87.32 million bales in 2020-21
Global production highlights
Argentina beans: 43.5 MMT for 2021-22; compares with 45.0 MMT in February
— compares with 46.2 MMT in 2020-21
Brazil beans: 127.0 MMT for 2021-22; compares with 134.0 MMT in February
— compares with 138.0 MMT in 2020-21
Argentina wheat: 20.5 MMT for 2021-22; compares with 20.5 MMT in February
— compares with 17.64 MMT in 2020-21
Australia wheat: 36.3 MMT for 2021-22; compares with 34.0 MMT in February
— compares with 33.3 MMT in 2020-21
China wheat: 136.95 MMT for 2021-22; compares with 136.95 MMT in February
— compares with 134.25 MMT in 2020-21
Canada wheat: 21.65 MMT for 2021-22; compares with 21.65 MMT in February
— compares with 35.18 MMT in 2020-21
EU wheat: 139.0 MMT for 2021-22; compares with 138.9 MMT in February
— compares with 126.93 MMT in 2020-21
Russia wheat: 75.16 MMT for 2021-22; compares with 75.5 MMT in February
— compares with 85.35 MMT in 2020-21
Ukraine wheat: 33.0 MMT for 2021-22; compares with 33.0 MMT in February
— compares with 25.42 MMT in 2020-21
China corn: 272.55 MMT for 2021-22; compares with 272.55 MMT in February
— compares with 260.67 MMT in 2020-21
Argentina corn: 53.0 MMT for 2021-22; compares with 54.0 MMT in February
— compares with 51.5 MMT in 2020-21
Brazil corn: 114.0 MMT for 2021-22; compares with 114.0 MMT in February
— compares with 87.0 MMT in 2020-21
Ukraine corn: 41.9 MMT for 2021-22; compares with 42.0 MMT in February
— compares with 30.3 MMT in 2020-21
South Africa corn: 16.3 MMT for 2021-22; compares with 17.0 MMT in February
— compares with 16.95 MMT in 2020-21
China cotton: 27.0 million bales for 2021-22; compares with 27.0 million bales in February
— compares with 29.5 million bales in 2020-21
