PF Report Reaction: Winter wheat crop estimate well below expectations

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Market reaction

Ahead of USDA's reports, corn futures were trading 3 to 4 cents higher, soybeans were 2 to 9 cents higher, wheat was mostly 8 to 12 cents higher and cotton was 75 to 200 points higher.

As of 11:30 a.m. CT, corn futures are trading steady to 9 cents higher, soybeans are 3 to 4 cents higher, wheat futures are 25 to 35 cents higher and cotton is 300 to 400 points higher.

 

Winter wheat production

All wheat: 1.729 billion bu.; trade expected 1.791 billion bu.
— compares with 1.646 billion bu. in 2021

All winter wheat: 1.174 billion bu.; trade expected 1.239 billion bu.
— compares with 1.277 billion bu. in 2021

HRW: 590 million bu.; trade expected 685 million bu.
— compares with 749 million bu. in 2021

SRW: 354 million bu.; trade expected 359 million bu.
— compares with 361 million bu. in 2021

White winter: 230 million bu.; trade expected 199 million bu.
— compares with 167 million bu. in 2021

USDA’s initial winter wheat crop estimate is 103 bu. below last year and 65 million bu. below pre-report expectations. The bulk of the decline is in the HRW crop, which is estimated down 159 million bu. from last year and 95 million bu. less than traders anticipated. The SRW crop estimate is down 7 million bu. from last year and 5 million bu. less than expected. White winter wheat production is expected to rise 63 million bu. from last year and 31 million bu. more than anticipated.

USDA estimates the winter wheat yield at 47.9 bu. per acre, down 2.3 bu. from last year. Harvested acres are pegged at 24.499 million acres, down 965,000 acres from last year.  USDA noted: “Abandonment for winter wheat is the highest since 2002 with the highest levels in Texas and Oklahoma.” USDA’s initial Kansas wheat yield is 39 bu. per acre, down 13 bu. from last year. Sharp year-over-year declines in yield for the HRW crop are also expected in Texas (32 bu. vs. 37 bu. last year), Oklahoma (25 bu. v. 39 bu.), Colorado (31 bu. vs. 37 bu.) and Nebraska (41 bu. vs. 49 bu.).

USDA’s all-wheat crop projection of 1.729 billion bu. implies combined other spring wheat and durum production of 555 million bu., which would be up 187 million bu. from last year’s drought-damaged crop.

 

 

 

U.S. carryover

Corn: 1.440 billion bu. for 2021-22; unchanged from 1.440 billion bu. in April
projection of 1.360 billion bu. for 2022-23

Beans: 235 million bu. for 2021-22; down from 260 million bu. in April
projection of 310 million bu. for 2022-23

Wheat: 655 million bu. for 2021-22; down from 678 million bu. in April
projection of 619 million bu. for 2022-23

Cotton: 3.4 million bales for 2021-22; down from 3.5 million bales in April
projection of 2.9 million bales for 2022-23

USDA made no changes to the old-crop balance sheet for corn but did raise the national average on-farm cash corn price a dime to $5.90. The 2021-22 corn ending stocks forecast is 28 million bu. above the average pre-report trade estimate.

The first look the 2022-23 marketing year for corn includes a big surprise. USDA cut 4 bu. per acre from the trendline yield, dropping it to 177 bu. per acre. The footnote on yield says, “The yield projection is based on a weather-adjusted trend, estimated using the 1988-2021 time period, assuming normal summer growing season weather but lower to reflect the slow pace of planting progress as of early May.” The yield, combined with projected harvested acres of 81.7 million, would produce a crop of 14.460 billion bushels. Total supplies would reach 15.925 billion, down 450 million bu. from this year. Total use is projected at 14.565 billion bu., down 370 million bu. from this year’s forecast. Corn carryover at the end of the 2022-23 marketing year is projected at 1.36 billion bu., down 80 million bu. from this year but 8 million bu. above the average pre-report trade estimate. USDA’s first projection of the national average on-farm cash corn price for 2022-23 is $6.75.

The old-crop bean carryover forecast is down 25 million bu. from last month but is 10 million bu. above the average pre-report trade estimate. USDA made no change on the supply-side of the balance sheet. USDA increased estimated exports 25 million bushels (to 2.14 billion bu.). Crush was unchanged at 2.215 billion bushels. The national average on-farm cash bean price for 2021-22 is estimated at $13.25, unchanged from last month.

USDA stuck with the trendline soybean yield of 51.5 bu. per acre and with the acreage estimate from the Prospective Plantings Report. With harvested acres of 90.1 million, the 2022 bean crop is projected at 4.640 billion bushels. Total supplies of 4.89 billion bu. would be up 183 million bu. from the current marketing year. New-crop bean use is projected at 4.58 billion bu., up 108 million bushels from this year. Carryover is projected at 310 million bu., up 75 million from this year but 7 million bu. below the average pre-report trade guess. USDA’s first projection of the national average on-farm cash bean price for 2022-23 is $14.40.

Old-crop wheat carryover is down 23 million bu. from last month and is 31 million bu. below the average pre-report trade estimate. USDA increased estimated old-crop wheat food use 3 million bu. (to 962 million bu.) and exports 20 million bushels (to 805 million bu.). USDA puts the national average on-farm cash wheat price at $7.70, up a dime from last month.

The new-crop wheat balance sheet includes the first survey-based winter wheat crop estimate of the year. Total supplies are projected at 2.504 billion bu., down 82 million bushels from the current marketing year. USDA projects total use at 1.885 billion bu., down 46 million bushels from this year. At 619 million bu., 2022-23 wheat carryover would be down 36 million bu. from the current marketing year and is 40 million bu. below the average pre-report trade estimate. USDA projects a 2022-23 national average on-farm cash wheat price of $10.75.

Old-crop cotton carryover is down 100,000 bales from last month. USDA trimmed 100,000 bales from the 2021 cotton crop and made no changes on the demand-side of the balance sheet. USDA estimates the national average on-farm cash cotton price for the current marketing year at 92 cents, up a penny from last month.

New-crop cotton carryover of 2.9 million bales would be down 500,000 bales from the current marketing year and is 670,000 bales below the average pre-report trade estimate. Cotton production for 2022-23 is projected at 16.5 million bales, down 1.02 million from 2021. Total supplies are projected at 19.91 million with total use projected at 17 million bales, down 300,000 from this year. USDA projects a 2022-23 national average on-farm cash cotton price of 90 cents.

 

Global carryover

Corn: 309.39 MMT for 2021-22; up from 305.46 MMT in April
— projection of 305.13 MMT for 2022-23

Beans: 85.24 MMT for 2021-22; down from 89.58 MMT in April
— projection of 99.60 MMT for 2022-23

Wheat: 279.72 MMT for 2021-22; up from 278.42 MMT in April
— projection of 267.02 MMT for 2022-23

Cotton: 83.65 million bales for 2021-22; up from 83.38 million bales in April
— projection of 82.82 million bales for 2022-23

 

 

Global production highlights

Argentina beans: 42.0 MMT for 2021-22; compares with 43.5 MMT in April
— projection of 51.0 MMT for 2022-23

Brazil beans: 125.0 MMT for 2021-22; compares with 125.0 MMT in April
— projection of 149.0 MMT for 2022-23

Argentina wheat: 22.15 MMT for 2021-22; compares with 21.0 MMT in April
— projection of 20.0 MMT for 2022-23

Australia wheat: 36.3 MMT for 2021-22; compares with 36.3 MMT in April
— projection of 30.0 MMT for 2022-23

China wheat: 136.95 MMT for 2021-22; compares with 136.95 MMT in April
— projection of 135.0 MMT for 2022-23

Canada wheat: 21.65 MMT for 2021-22; compares with 21.65 MMT in April
— projection of 33.0 MMT for 2022-23

EU wheat: 138.42 MMT for 2021-22; compares with 138.42 MMT in April
— projection of 136.5 MMT for 2022-23

Russia wheat: 75.16 MMT for 2021-22; compares with 75.16 MMT in April
— projection of 80.0 MMT for 2022-23

Ukraine wheat: 33.01 MMT for 2021-22; compares with 33.0 MMT in April
— projection of 21.5 MMT for 2022-23

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

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

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

Ukraine corn: 42.13 MMT for 2021-22; compares with 41.9 MMT in April
— projection of 19.5 MMT for 2022-23

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

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

 

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