USDA Reports Preview
Wednesday, June 7, 2023 10:41AM CDT
USDA's June World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports may not have much new to say for corn and soybeans, but there will be new wheat crop estimates from around the world, a new set of U.S. winter wheat estimates from the National Agricultural Statistics Service (NASS) and a fresh look at Brazil's corn production. Both reports will be released at 11 a.m. CDT Friday, June 9, followed with prompt coverage by DTN and a free DTN webinar at 12:30 p.m.CORN:
Since USDA released its new-crop ending-stocks estimate of 2.222 billion bushels (bb) for the U.S. on May 12, December corn prices have traded higher as dry weather concerns across the Midwest gained more attention and called into question earlier estimates of a record crop this fall. USDA probably won't change its 15.265 bb production estimate in the June report, but analysts in Dow Jones' survey do expect a slight tweak to 15.21 bb, based on a slightly lower yield of 181.2 bushels per acre (bpa). Of course, traders know weather is in charge of that show, not USDA.
On the demand side, corn export shipments are down 34% from a year ago with three months remaining, but USDA's export estimate is only down 28% from a year ago, so there is more room for another 75-million-bushel (mb) cut in the export estimate if USDA so chooses on Friday. The pace of ethanol production is also running below USDA's estimate, so a small reduction in corn demand for ethanol is also on the table. Countering those two bearish possibilities, cash basis remains strong in the country, suggesting active domestic demand for physical corn. Dow Jones expects USDA to increase its estimate of old-crop U.S. ending stocks from 1.417 bb to 1.446 bb. New-crop ending stocks are expected at 2.220 bb, down slightly from last month's estimate of 2.222 bb.
Outside of the U.S., traders will be interested in Brazil's corn production. USDA currently estimates a record-high 130.0 million metric tons (mmt), or 5.12 bb. Local estimates are lower, but Brazil's cheap corn prices show no concern about corn production in Brazil. Dow Jones' survey expects USDA to slightly increase Brazil's estimate to 130.8 mmt and reduce Argentina's estimate from 37.0 mmt to 35.5 mmt, or 1.40 bb. For the new 2023-24 season, Dow Jones expects USDA to slightly reduce its estimate of world corn ending stocks from 312.90 mmt to 312.80 mmt, or 12.31 bb, still a large increase over the current season's 297.41 mmt.SOYBEANS:
Unlike corn, November soybean prices have not had much reaction to the recent lack of rain in the Midwest, but that doesn't mean moisture won't be important at some point. It does mean, however, USDA probably won't change its production estimate on June 9, currently sitting at 4.51 bb, based on a yield of 52.0 bpa. Dow Jones' survey is expecting 4.505 bb, based on a yield of 51.9 bpa.
Soybean export shipments are staying ahead of USDA's estimated pace and just 68 mb of sales are needed in the next three months to have a chance of reaching USDA's export goal for 2022-23. USDA's 2.015 bb export estimate should be safe in Friday's report, but USDA may be tempted to make a small reduction to the soybean crush estimate as lower meal prices have reduced the crush incentive even further since May 12. Dow Jones' survey expects USDA to increase its estimate of 2022-23 U.S. ending soybean stocks from 215 mb to 223 mb, but only slightly increase the new-crop ending-stocks estimate from 335 mb to 336 mb. If true, it would be the largest soybean surplus in four years.
Traders may notice South American soybean crop estimates in Friday's report, but probably won't give them much weight at this late date. Dow Jones expects the estimate of Brazil's soybean production to increase slightly, from 155.0 mmt to 155.5 mmt, or 5.71 bb. The estimate for Argentina is expected to drop from 27.0 mmt to 24.3 mmt, or 893 mb. Looking ahead to 2023-24, Dow Jones' survey expects 121.7 mmt (4.47 bb) of world soybean stocks, down slightly from last month's estimate of 122.50 mmt, but up substantially from 101.04 mmt in the current season.WHEAT:
With winter wheat harvests just getting underway in the Northern Hemisphere, there will be plenty of new numbers for wheat traders to consider in Friday's report. Here in the U.S., Dow Jones' survey expects 1.666 bb of U.S. wheat production, slightly more than last month's 1.659 bb estimate. In the Crop Production report from NASS, analysts expect the estimate of winter wheat production to increase slightly, from 1.130 bb to 1.137 bb. Estimates for hard red winter wheat and white winter wheat are expected to stay within 1 mb of last months estimates, at 515 mb and 211 mb, respectively. The estimate for soft red winter wheat is expected to increase from 406 mb to 413 mb -- all small changes.
On the demand side, hard red winter (HRW) wheat, especially, has struggled finding exports in 2023. Dow Jones expects old-crop U.S. ending wheat stocks will increase from 598 mb to 606 mb on Friday. The estimate of new-crop ending stocks is expected to increase from 556 mb to 568 mb, an amount that would still be the lowest in 10 years.
Outside of the U.S., there will be plenty of attention on new production estimates for the world's major wheat producers. Larger crops are expected this year in Canada, Europe and Argentina, while a smaller wheat crop is expected in Ukraine. Russia's wheat crop is not expected to be as big as last year's 92.0 mmt estimate from USDA but will likely continue to dominate the export market. Many will watch to see if USDA reduces its 140.0 mmt (5.14 bb) production estimate for China after Henan province was recently hit by heavy rains. Dow Jones expects USDA will slightly reduce its estimate of 2023-24 world ending wheat stocks from 264.34 mmt to 264.20 mmt or 9.71 bb, the lowest in seven years.
Typically, June WASDE reports don't have much new to offer for corn and soybeans markets, except for an update on Brazil's safrinha crop, and it is likely Friday's report will be overshadowed by the latest weather forecast. For wheat, however, estimates are taking on a new importance ahead of harvest, and the June report could set the tone of prices for this summer.
Join us for DTN's webinar at 12:30 p.m. CDT Friday as we go through the numbers, discuss what they mean for prices and hear my take on which estimates are reasonable and which are not. We also welcome and make time for questions. Register here for Friday's June WASDE and Crop Production reports webinar: https://www.dtn.com/…
Todd Hultman can be reached at email@example.com
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