PF Reaction: Bullish response to USDA reports
Market reaction
Ahead of USDA's reports, corn futures were trading 10 to 12 cents higher, soybeans were mostly 15 to 20 cents higher, winter wheat futures were 3 to 6 cents higher, spring wheat futures were 12 to 15 cents higher and cotton futures were narrowly mixed.
In reaction to the reports, corn futures are still trading around a dime higher and soybeans are up 15 to 25 cents. Spring wheat futures have rallied 28 to 32 cents, with winter wheat futures up 16 to 22 cents. Cotton futures have improved to trade 27 to 32 cents higher.
U.S. wheat production
All wheat: 1.746 billion bu.; trade expected 1.847 billion bu.
— compares with 1.898 billion bu. in June; 1.826 billion bu. in 2020
All winter wheat: 1.364 billion bu.; trade expected 1.331 billion bu.
— compares with 1.309 billion bu. in June; 1.171 billion bu. in 2020
HRW: 804.6 million bu.; trade expected 786 million bu.
— compares with 771 million bu. in June; 659 million bu. in 2020
SRW: 362.0 million bu.; trade expected 340 million bu.
— compares with 335 million bu. in June; 266 million bu. in 2020
White winter: 197.6 million bu.; trade expected 205 million bu.
— compares with 202 in June; 246 million bu. in 2020
Other spring: 344.6 million bu.; trade expected 459 million bu.
— compares with 586.0 million bu. in 2020
Durum: 37.2 million bu.; trade expected 56 million bu.
— compares with 68.8 million bu. in 2020
USDA’s winter wheat crop estimate was up 55 million bu. from last month (33 million bu. above trade expectations), but the first survey-based other spring wheat and durum crop estimates of the year came in way below trade expectations, pulling total wheat production down 152 million bu. from last month. That all wheat production estimate is also 101 million bu. below the average pre-report trade estimate.
Hard red winter wheat production is up 33.6 million bu. from June and is 18.6 million bu. above the average pre-report trade estimate. The Kansas winter wheat crop is estimated at 379.5 million bu., with a state average yield of 55 bu. per acre, up 3 bu. per acre from the June estimate.
Soft red winter wheat production is up 27 million bu. from last month and is 22 million bu. above the average pre-report trade estimate.
White winter wheat production is down 4.6 million bu. from June and is 7.6 million bu. below the average pre-report trade estimate.
Winter wheat harvested acres are now estimated at 25.443 million, up 831,000 acres from last month. USDA puts the national average winter wheat yield at 53.6 bu. per acre, up 0.4 bu. from last month.
Other spring wheat production came in 114.4 million bu. below the average pre-report trade estimate and is 241 million bu. below the 2020 other spring wheat crop. USDA puts harvested wheat acres at 11.215 million, down 845,000 from last year and the national average other spring wheat yield at 30.7 bu. per acre, well below last year’s 48.6 bu. per acre.
Durum wheat production is 18.8 million bu. below the average pre-report trade estimate and is down 31.6 million bu. from last year. USDA puts harvested durum wheat acres at 1.444 million, down 218,000 from last year and the national average durum yield at 25.8 bu. per acre, down sharply from last year’s 41.4 bu. per acre.
In June, the all-wheat crop production estimate used a combined spring wheat and durum crop projection of 589 million bushels. The first survey-based estimate of the year resulted in a combined estimate of just 381.8 million bushels.
U.S. carryover
Corn: 1.082 billion bu. for 2020-21; down from 1.107 billion bu. in June
— 1.432 billion bu. for 2021-22; up from 1.357 billion bu. in June
Beans: 135 million bu. for 2020-21; unchanged from 135 million bu. in June
— 155 million bu. for 2021-22; unchanged from 155 million bu. in June
Wheat: 844 million bu. for 2020-21; down from 852 million bu. in June
— 665 million bu. for 2021-22; down from 770 million bu. in June
Cotton: 3.15 million bales for 2020-21; unchanged from 3.15 million bales in June
— 3.30 million bales for 2021-22; up from 2.90 million bales in June
USDA trimmed its old-crop corn ending stocks estimate by 25 million bu. from last month, which was slightly more than traders expected. The only change to the balance sheet was a 25-million-bu. increase to feed and residual use (to 5.725 billion bu.). USDA raised its 2020-21 on-farm average cash corn price estimate by a nickel from last month to $4.40.
For 2021-22, USDA raised projected ending stocks by 75 million bu. from last month. It increased planted and harvested corn acreage based on the June 30 Acreage Report. USDA did not change the projected yield. That added 150 million bu. to total projected new-crop supplies. Only partially offsetting that increase was a 75-million-bu. rise in projected use. USDA raised feed and residual use by 25 million bu. (to 5.725 billion bu.) and increased projected exports by 50 million bushels (to 2.5 billion bu.). USDA lowered its 2021-22 national average on-farm cash corn price forecast by a dime from last month to $5.60 per bushel.
USDA left its old-crop soybean ending stocks forecast unchanged from last month. There were some adjustments to the balance sheet, however. USDA lowered estimated imports by 15 million bushels (to 20 million bu.). That was completely offset by a 5-million-bu. cut to crush (to 2.17 billion bu.) and a 10-million-bu. reduction to exports (to 2.27 billion bu.). USDA lowered its old-crop national average on-farm cash price forecast by 20 cents to $11.05 per bushel.
For 2021-22, USDA left projected ending stocks unchanged from last month. It made no changes to the supply or demand sides of the balance sheet. USDA lowered its 2021-22 national average on-farm cash price forecast by 15 cents from last month to $13.70 a bushel.
Wheat ending stocks for 2020-21 were set at 844 million bu. in the June 30 Grain Stocks Report. To get there, USDA decreased total supplies by 5 million bu. on a smaller import figure. On the demand side of the balance sheet, USDA trimmed seed use and feed and residual use by 2 million bu. each and raised exports by 7 million bushels. USDA’s national average on-farm cash price forecast remained at $5.05 a bushel, unchanged from last month.
For 2021-22, USDA cut its wheat ending stocks projection by 105 million bu. from last month. It lowered projected total supplies by 140 million bu. amid the reduced beginning stocks and smaller crop estimate, which were partially offset by a bigger import forecast. On the demand side of the new-crop balance sheet, USDA lowered feed and residual use by 10 million bu. and projected exports by 25 million bushels. USDA raised its 2021-22 average on-farm cash wheat price forecast by a dime to $6.60.
USDA made no changes to the supply or demand side of its old-crop cotton balance sheet this month. It lowered the national average on-farm cash price forecast by a half-cent to 66.5 cents.
For 2021-22, USDA raised projected ending stocks by 400,000 bales from last month. It increased total supplies by 800,000 bales on a rise in harvested acres that more than offset a 33-lb. cut to the projected yield. On the demand side, projected exports were raised 400,000 bales. USDA left its new-crop national average on-farm cash price forecast at 75 cents.
Global carryover
Corn: 279.86 MMT for 2020-21; down from 280.60 MMT in June
— 291.18 MMT for 2021-22; up from 289.41 MMT in June
Beans: 91.49 MMT for 2020-21; up from 88.0 MMT in June
— 94.49 MMT for 2021-22; up from 92.55 MMT in June
Wheat: 290.18 MMT for 2020-21; down from 293.48 MMT in June
— 291.68 MMT for 2021-22; down from 296.80 MMT in June
Cotton: 91.57 million bales for 2020-21; down from 93.05 million bales in June
— 87.74 million bales for 2021-22; down from 89.30 million bales in June
Global production highlights
Argentina beans: 46.5 MMT for 2020-21; compares with 47.0 MMT in June
— 52.0 MMT for 2021-22; compares with 52.0 MMT in June
Brazil beans: 137.0 MMT for 2020-21; compares with 137.0 MMT in June
— 144.0 MMT for 2021-22; compares with 144.0 MMT in June
Argentina wheat: 17.63 MMT for 2020-21; compares with 17.63 MMT in June
— 20.5 MMT for 2021-22; compares with 20.5 MMT in June
Australia wheat: 33.0 MMT for 2020-21; compares with 33.0 MMT in June
— 27.0 MMT for 2021-22; compares with 27.0 MMT in June
China wheat: 134.25 MMT for 2020-21; compares with 134.25 MMT in June
— 136.0 MMT for 2021-22; compares with 136.0 MMT in June
Canada wheat: 35.18 MMT for 2020-21; compares with 35.18 MMT in June
— 31.5 MMT for 2021-22; compares with 32.0 MMT in June
EU wheat: 125.94 MMT for 2020-21; compares with 125.94 MMT in June
— 138.2 MMT for 2021-22; compares with 137.5 MMT in June
Russia wheat: 85.35 MMT for 2020-21; compares with 85.35 MMT in June
— 85.0 MMT for 2021-22; compares with 86.0 MMT in June
Ukraine wheat: 25.42 MMT for 2020-21; compares with 25.42 MMT in June
— 30.0 MMT for 2021-22; compares with 29.5 MMT in June
China corn: 260.67 MMT for 2020-21; compares with 260.67 MMT in June
— 268.0 MMT for 2021-22; compares with 268.0 MMT in June
Argentina corn: 48.5 MMT for 2020-21; compares with 47.0 MMT in June
— 51.0 MMT for 2021-22; compares with 51.0 MMT in June
Brazil corn: 93.0 MMT for 2020-21; compares with 98.5 MMT in June
— 118.0 MMT for 2021-22; compares with 118.0 MMT in June
Ukraine corn: 30.3 MMT for 2020-21; compares with 30.3 MMT in June
— 37.5 MMT for 2021-22; compares with 37.5 MMT in June
South Africa corn: 17.0 MMT for 2020-21; compares with 17.0 MMT in June
— 17.0 MMT for 2021-22; compares with 17.0 MMT in June
China cotton: 29.5 million bales for 2020-21; compares with 29.5 million bales in June
— 26.75 million bales for 2021-22; compares with 26.75 million bales in June
