PF Reaction: USDA cuts corn carryover more than expected; soybean ending stocks higher than anticipated

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Market reaction

Ahead of USDA's reports, corn futures were trading 6 to 13 cents higher, soybeans were fractionally weaker in the July contract and around 4 cents higher in new-crop contracts, SRW wheat futures were mixed, HRW was around 3 cents higher, spring wheat futures were 7 to 8 cents higher and cotton was 15 to 35 points higher.

In reaction to the data, corn futures are up 10 to 16 cents with July leading gains. Old-crop soybeans have fallen 6 to 10 cents, but deferred contracts are up 3 to 7 cents. Wheat futures are little-changed vs. pre-report action. SRW wheat futures continue to trade mixed, HRW wheat has climbed 4 to 5 cents and spring wheat futures are up 7 to 9. Cotton futures are 20 to 35 points higher.

 

Winter wheat production

All wheat: 1.898 billion bu.; trade expected 1.892 billion bu.
— compares with 1.872 billion bu. in May; 1.826 billion bu. in 2020
All winter wheat: 1.309 billion bu.; trade expected 1.312 billion bu.
— compares with 1.283 billion bu. in May; 1.171 billion bu. in 2020
HRW: 771 million bu.; trade expected 760 million bu.
— compares with 731 million bu. in May; 659 million bu. in 2020
SRW: 335 million bu.; trade expected 333 million bu.
— compares with 332 million bu. in May; 266 million bu. in 2020
White winter: 202 million bu.; trade expected 216 million bu.
— compares with 221 in May; 246 million bu. in 2020

USDA’s winter wheat crop estimate is up 26 million bu. from May, but it’s 3 million bushels below the average pre-report trade estimate. The national average winter wheat yield is estimated at 53.2 bushels per acre, up 1.1 bu. from the May estimate, and harvested area for the winter wheat crop is unchanged from last month at 24.612 million acres.

The HRW crop estimate is nearly 12 million bu. above the average pre-report trade estimate and up 40 million bu. from last month. In HRW country, state yields were increased in Colorado (up 5 bu. to 39 bu. per acre), Kansas (up 4 bu. to 52 bu.), Nebraska (up 4 bu. to 51 bu.) and Texas (up 2 bu. to 34 bu. per acre). The average yield in Oklahoma dropped 1 bu. from last month to 39 bu. per acre. Kansas production is now estimated at 358.8 million bu., up 27.6 million bu. from May.

The SRW crop estimate is 2.5 million bu. above the average pre-report trade estimate and is up 3.5 million bu. from May. Yields in SRW states were steady to slightly higher compared with last month. Michigan is an exception where expected yield fell 2 bu. to 80 bu. per acre.

White winter wheat crop estimate is 14 million bu. below trade expectations and down 19 million bu. from May. Yields in white-winter-wheat-heavy states are down from last month in: Idaho (down 8 bu. to 87 bu. per acre), Oregon (down 6 bu. to 50 bu.) and Washington (down 7 bu. to 57 bu. per acre). Montana’s yield increased 2 bu. to 51 bu. per acre.

USDA’s all-wheat production estimate stands at 1.898 billion bu., up 26 million bu. from last month but 4 million bu. above the average pre-report trade estimate. The national average wheat yield is 50.7 bu. per acre, up 0.7 bu. from last month. Implied other spring wheat and durum wheat combined production is 589 million bu., unchanged from last month.

 

U.S. carryover

Corn: 1.107 billion bu. for 2020-21; down from 1.257 billion bu. in May
— 1.357 billion bu. for 2021-22; down from 1.507 billion bu. in May
Beans: 135 million bu. for 2020-21; up from 120 million bu. in May
— 155 million bu. for 2021-22; up from 140 million bu. in May
Wheat: 852 million bu. for 2020-21; down from 872 million bu. in May
— 770 million bu. for 2021-22; down from 774 million bu. in May
Cotton: 3.15 million bales for 2020-21; down from 3.30 million bales in May
— 2.90 for 2021-22; down from 3.10 million bales in May

USDA cut its old-crop corn ending stocks figure by 150 million bu. from last month, whereas traders anticipated a 50-million-bu. decline. USDA made no changes to the supply side of the balance sheet. On the demand side, USDA raised food, seed and industrial use by 75 million bu. (to 6.47 billion bu.), with all of that going to corn-for-ethanol use, which is now estimated at 5.05 billion bushels. USDA alsp increased estimated old-crop corn exports another 75 million bushels (to a record 2.85 billion bu.). USDA kept its 2020-21 corn on-farm cash price forecast at $4.35 a bu., unchanged from May.

USDA also lowered its new-crop corn carryover projection by 150 million bu. from last month. Traders expected the 2021-22 ending stocks projection to be cut 84 million bushels. The only change to the new-crop balance sheet was the lower beginning stocks (old-crop carryover). USDA maintained it 2021-22 on-farm cash corn price forecast at $5.70 per bu., unchanged from last month.

USDA raised its old-crop soybean ending stocks forecast by 15 million bu. from last month. Traders anticipated only a 2-million-bu. increase. The only change was a 15-million-bu. cut to estimated old-crop crush (to 2.175 billion bu.). USDA kept its old-crop on-farm cash soybean price forecast at $11.25 a bu., unchanged from last month.

USDA raised its new-crop soybean ending stocks projection by 15 million bu., with the only change being the bigger beginning stocks (old-crop carryover). USDA kept its 2021-22 on-farm cash soybean price projection at $13.85 per bu., unchanged from last month.

USDA lowered its 2020-21 wheat ending stocks estimate by 20 million bu. from last month. The only change was a 20-million-bu. increase to old-crop exports (to 985 million bu.). USDA kept its old-crop on-farm cash wheat price forecast at $5.05 a bu., unchanged from last month.

USDA trimmed its new-crop wheat carryover projection by 4 million bu. from last month, whereas traders anticipated a 9-million-bu. increase. Total supplies were raised 6 million bu. as the bigger crop estimate was mostly offset by smaller beginning stocks (old-crop carryover). On the demand side, USDA increased projected feed and residual use by 10 million bushels (to 180 million bu.). USDA kept its 2021-22 on-farm cash wheat price projection at $6.50 per bu., unchanged from May.

USDA cut its old-crop cotton ending stocks estimate by 150,000 bales from last month. The only change was a 150,000-bale increase to estimated old-crop exports (to 16.4 million bales). USDA lowered its old-crop on-farm cash cotton price by a penny to 67 cents per pound.

USDA lowered its new-crop cotton ending stocks forecast by 200,000 bales from last month. In addition to the smaller beginning stocks (old-crop carryover), USDA raised projected exports by 100,000 bales (to 14.8 million bales) and lowered unaccounted use by 50,000 bales (to -50,000 bales). USDA kept its 2021-22 on-farm average cash cotton price projection at 85 cents, unchanged from last month.

 

Global carryover

Corn: 280.60 MMT; down from 283.53 MMT in May
— 289.41 MMT for 2021-22; down from 292.30 MMT in May
Beans: 88.00 MMT; up from 86.55 MMT in May
— 92.55 MMT for 2021-22; up from 91.10 MMT in May
Wheat: 293.48 MMT; down from 294.67 MMT in May
— 296.80 MMT for 2021-22; up from 294.96 MMT in May
Cotton: 93.05 million bales; down from 93.16 million bales in May
— 89.30 million bales for 2021-22; down from 90.99 million bales in May

 

2020-21 global production highlights

Argentina beans: 47.0 MMT; compares with 47.0 MMT in May
— 52.0 MMT for 2021-22; compares with 52.0 MMT in May
Brazil beans: 137.0 MMT; compares with 136.0 MMT in May
— 144.0 MMT for 2021-22; compares with 144.0 MMT in May
Argentina wheat: 17.63 MMT; compares with 17.63 MMT in May
— 20.5 MMT for 2021-22; compares with 20.5 MMT in May
Australia wheat: 33.0 MMT; compares with 33.0 MMT in May
— 27.0 MMT for 2021-22; compares with 27.0 MMT in May
China wheat: 134.25 MMT; compares with 134.25 MMT in May
— 136.0 MMT for 2021-22; compares with 136.0 MMT in May
Canada wheat: 35.18 MMT; compares with 35.18 MMT in May
— 32.0 MMT for 2021-22; compares with 32.0 MMT in May
EU wheat: 125.94 MMT; compares with 124.95 MMT in May
— 137.5 MMT for 2021-22; compares with 134.0 MMT in May
Russia wheat: 85.35 MMT; compares with 85.35 MMT in May
— 86.0 MMT for 2021-22; compares with 85.0 MMT in May
Ukraine wheat: 25.42 MMT; compares with 25.42 MMT in May
— 29.5 MMT for 2021-22; compares with 29.0 MMT in May
China corn: 260.67 MMT; compares with 260.67 MMT in May
— 268.0 MMT for 2021-22; compares with 268.0 MMT in May
Argentina corn: 47.0 MMT; compares with 47.0 MMT in May
— 51.0 MMT for 2021-22; compares with 51.0 MMT in May
Brazil corn: 98.5 MMT; compares with 102.0 MMT in May
— 118.0 MMT for 2021-22; compares with 118.0 MMT in May
Ukraine corn: 30.3 MMT; compares with 30.3 MMT in May
— 37.5 MMT for 2021-22; compares with 37.5 MMT in May
South Africa corn: 17.0 MMT; compares with 17.0 MMT in May
— 17.0 MMT for 2021-22; compares with 17.0 MMT in May
China cotton: 29.5 million bales; compares with 29.5 million bales in May
— 26.75 million bales; compares with 27.5 million bales in May

 

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