PF Reaction: Markets firm in response to USDA's September reports
Market reaction
Ahead of USDA's reports, corn futures were trading 1 to 2 cents lower, soybeans were mostly around a penny lower, wheat futures were 5 to 8 cents lower and cotton futures were narrowly mixed.
Following the release, corn futures are up 2 to 3 cents in most contracts. Soybeans have rocketed 15 to 17 cents higher. Wheat futures are a mixed bag, with winter wheat contracts mixed and spring wheat reversing 5 to 8 cents higher. Cotton futures have also strengthened to post gains of 27 to 35 points.
Crop production
Corn: 14.996 billion bu.; trade expected 14.942 billion bu.
— compares to 14.750 billion bu. projected in August
Beans: 4.374 billion bu.; trade expected 4.377 billion bu.
— compares to 4.339 billion bu. projected in August
Cotton: 18.509 million bales; trade expected 17.690 million bales
— compares to 17.264 million bales projected in August
USDA raised its corn crop estimate 246 million bu. from last month, which was 54 million bu. more than traders anticipated. USDA raised the national average yield by 1.7 bu. to 176.3 bu. per acre. That would be the third highest yield on record behind 176.6 bu. in 2017 and 176.4 bu. in 2018. USDA increased harvested acreage by 590,000 acres from its June estimate to 85.085 million acres.
Compared with last month, USDA raised corn yields in Indiana (up 3 bu. to 197 bu.), Iowa (up 5 bu. to 198 bu.), Michigan (up 5 bu. to 174 bu.), Minnesota (up 8 bu. to 174 bu.), Nebraska (up 2 bu. to 188 bu.), North Dakota (up 2 bu. to 108 bu.) and Wisconsin (up 5 bu. to 172 bu.). USDA kept its yield estimate unchanged in Illinois (214 bu.), Kansas (138 bu.) and South Dakota (133 bu.). USDA cut its yield estimate in Missouri (down 2 bu. to 169 bu.) and Ohio (down 3 bu. to 190 bu.). USDA estimates record yields in 10 states: California, Illinois, Indiana, Kentucky, Michigan, New York, North Carolina, Ohio, Oklahoma and Pennsylvania. USDA’s objective yield data reflects the second highest number of ears on record for the combined in field survey states of Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin.
USDA increased its soybean crop estimate 35 million bu. from last month, which was 3 million bu. less than the average pre-report estimate. It raised the national average yield by 0.6 bu. to 50.6 bu. per acre, which would match 2018 as the second highest on record behind 51.9 bu. in 2016. USDA cut harvested soybean acreage by 284,000 acres from its June estimate to 86.436 million acres.
Compared with last month, USDA raised soybean yields in Arkansas (up 1 bu. to 50 bu.), Iowa (up 1 bu. to 59 bu.), Michigan (up 2 bu. to 50 bu.), Minnesota (up 4 bu. to 47 bu.), Missouri (up 1 bu. to 51 bu.) and North Dakota (up 1 bu. to 25 bu.). USDA kept its yield estimate unchanged in Illinois (64 bu.), Indiana (60 bu.), Ohio (58 bu.) and Wisconsin (49 bu.). USDA cut its yield estimate in Kansas (down 1 bu. to 40 bu.), Nebraska (down 1 bu. to 59 bu.) and South Dakota (down 1 bu. to 38 bu.). Record yields are
forecast in Illinois, Indiana, Kentucky, Maryland, Mississippi, Missouri, New York, Ohio, Pennsylvania and Virginia. Pod counts are down versus year-ago in nine of the 11 objective yield states.
USDA increased its cotton crop estimate by 1.245 million bales from last month, which was 819,000 bales more than traders expected. It hiked the national average cotton yield by 95 lbs. per acre, but cut harvested acreage by 434,000 acres to 9.922 million acres.
Compared with last month, USDA raised the cotton yield in Texas (up 166 lbs. to 787 lbs.) and lowered it in Georgia (down 18 lbs. to 910 lbs.).
U.S. carryover
Corn: 1.187 billion bu. for 2020-21; up from 1.117 billion bu. in August
— 1.408 billion bu. for 2021-22; up from 1.242 billion bu. in August
Beans: 175 million bu. for 2020-21; up from 160 million bu. in August
— 185 million bu. for 2021-22; up from 155 million bu. in August
Wheat: 615 million bu. for 2021-22; down from 627 million bu. in August
Cotton: 3.15 million bales for 2020-21; down from 3.20 million bales in August
— 3.70 million bales for 2021-22; up from 3.00 million bales in August
USDA raised old-crop corn carryover 70 million bu. from last month to 1.117 billion bu., which was about 18 million bu. above the average pre-report trade estimate. USDA made no changes to old-crop supplies. On the demand side, it dropped Food, Seed & Industrial use 40 million bu. from last month, with all of the decline in the corn-for-ethanol component, which is now estimated at 5.035 billion bushels. Old-crop exports were cut 30 million bu. to 2.745 million bushels. The national average on-farm cash corn price for 2020-21 is now $4.45 per bu., up a nickel from last month.
New-crop total corn supplies are up 316 million bushels from last month due to the increase in beginning stocks (old-crop carryover) and the increase in estimated production. That increase in supply was partially offset by a 150-million bu. increase in total demand. USDA increased estimated Feed & Residual corn use 75 million bu. (to 5.7 billion bu.) and increased estimated exports 75 million bushels (to 2.475 billion bu.). The result was a 166-million-bu. increase in carryover from last month, which was also 26 million bu. above the average pre-report trade estimate. USDA puts the 2021-22 national average on-farm cash corn price at $5.45, down 30 cents from last month.
Old-crop soybean carryover is up 15 million bu. from last month and is 9 million bu. above the average pre-report trade estimate. USDA made no change to old-crop bean supplies. Soybean crush in 2020-21 is now estimated at 2.14 billion bu., down 15 million bu. from last month to account for the change to carryover. The national average on-farm cash bean price for 2020-21 is unchanged from last month at $10.90 a bushel.
New-crop total soybean supplies are up 41 million bushels from last month due to the increase in beginning stocks and the increase in estimated production. Those increases on the supply side were partially offset by a 10-million-bu. cut to estimated imports (to 25 million bu.). On the demand side, USDA cut estimated soybean crush 25 million bu. (to 2.18 billion) and increased exports 35 million bu. (2.09 billion) to push total expected use up 10 million bu. from last month (to 4.389 billion bu.). New-crop soybean carryover is up 30 million bu. from last month at 185 million bu., which was 5 million bu. below the average pre-report trade estimate. USDA puts the national average on-farm cash soybean price for 2021-22 at $12.90, down 80 cents from last month.
USDA trimmed expected 2021-22 wheat imports 10 million bu. from last month to drop total supplies by that amount. On the demand side, total use is up 2 million bu. from last month, the result of a 2-million-bu. increase in estimated 2021-22 wheat food use (to 964 million bu.). Estimated exports were left unchanged from last month at 875 million bushels. Ending stocks are down 12 million bu. from last month and are 1 million bu. below the average pre-report trade estimate. USDA puts the national average on-farm cash wheat price for 2021-22 at $6.60 a bu., down a dime from last month.
USDA trimmed old-crop cotton carryover 50,000 bales from last month to 3.15 million bales. Domestic use was increased 50,000 bales and exports were increased 20,000 bales to push total use up 70,000 bales from last month. Unaccounted use was cut 20,000 bales (to -10,000). The national average on-farm cash cotton price for 2020-21 is 66.5 cents per pound, unchanged from last month.
On new-crop, USDA increased total cotton supplies 1.19 million bales with a bigger crop estimate more than offsetting the slight cut to beginning stocks. On the demand side, domestic use was unchanged at 2.5 million bales. Estimated exports were increased 500,000 bales, to 15.5 million bales and unaccounted use was trimmed 10,000 bales (to -40,000). The result is a 700,000-bale-increase in estimated carryover. USDA now puts the national average on-farm cash cotton price for 2021-22 at 84 cents, up 4 cents from last month.
Global carryover
Corn: 286.48 MMT for 2020-21; up from 280.75 MMT in August
— 297.63 MMT for 2021-22; up from 284.63 MMT in August
Beans: 95.08 MMT for 2020-21; up from 92.82 MMT in August
— 98.89 MMT for 2021-22; up from 96.15 MMT in August
Wheat: 292.56 MMT for 2020-21; up from 288.83 MMT in August
— 283.22 MMT for 2021-22; up from 279.06 MMT in August
Cotton: 91.30 million bales for 2020-21; down from 91.78 million bales in August
— 86.68 million bales for 2021-22; down from 87.23 million bales in August
Global production highlights
Argentina beans: 46.0 MMT for 2020-21; compares with 46.0 MMT in August
— 52.0 MMT for 2021-22; compares with 52.0 MMT in August
Brazil beans: 137.0 MMT for 2020-21; compares with 137.0 MMT in August
— 144.0 MMT for 2021-22; compares with 144.0 MMT in August
Argentina wheat: 17.65 MMT for 2020-21; compares with 17.65 MMT in August
— 20.00 MMT for 2021-22; compares with 20.50 MMT in August
Australia wheat: 33.0 MMT for 2020-21; compares with 33.0 MMT in August
— 30.0 MMT for 2021-22; compares with 30.0 MMT in July
China wheat: 134.25 MMT for 2020-21; compares with 134.25 MMT in July
— 136.90 MMT for 2021-22; compares with 136.00 MMT in August
Canada wheat: 35.18 MMT for 2020-21; compares with 35.18 MMT in August
— 23.00 MMT for 2021-22; compares with 24.00 MMT in August
EU wheat: 125.94 MMT for 2020-21; compares with 125.94 MMT in August
— 139.00 MMT for 2021-22; compares with 138.60 MMT in August
Russia wheat: 85.35 MMT for 2020-21; compares with 85.35 MMT in August
— 72.50 MMT for 2021-22; compares with 72.50 MMT in August
Ukraine wheat: 25.42 MMT for 2020-21; compares with 25.42 MMT in August
— 33.00 MMT for 2021-22; compares with 33.00 MMT in August
China corn: 260.67 MMT for 2020-21; compares with 260.67 MMT in August
— 273.00 MMT for 2021-22; compares with 268.00 MMT in August
Argentina corn: 50.0 MMT for 2020-21; compares with 48.5 MMT in August
— 53.0 MMT for 2021-22; compares with 51.0 MMT in August
Brazil corn: 86.0 MMT for 2020-21; compares with 87.0 MMT in August
— 118.0 MMT for 2021-22; compares with 118.0 MMT in August
Ukraine corn: 30.3 MMT for 2020-21; compares with 30.3 MMT in August
— 39.0 MMT for 2021-22; compares with 39.0 MMT in August
South Africa corn: 17.0 MMT for 2020-21; compares with 17.2 MMT in August
— 17.0 MMT for 2021-22; compares with 17.0 MMT in August
China cotton: 29.50 million bales for 2020-21; compares with 29.50 million bales in August
— 26.75 million bales for 2021-22; compares with 26.75 million bales in August
