Corn, soybean estimates show record yields, not quite record production
Columnist Randy Martinson notes that the northern Plains continue to see slow planting progress in North Dakota while Minnesota and South Dakota have been able to catch up to their average pace.
Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at agweek.com.
The grains put in a mixed performance the second week of May.
Wheat found strength while corn and soybeans were under pressure. Chicago wheat joined the corn and soybean markets. Minneapolis and Kansas City wheat pushed higher in three of the five sessions while the Chicago markets were only able to post gains during one session.
The grains saw some heavy fund short covering and technical buying to close out the first week of May. Which in turn ended with all three wheat exchanges ending the week with a daily and weekly key reversal. Wheat was able to muster the strength to close at their 50% retracement which opened up the potential to test the 67% retracement level.
The Black Sea Initiative negotiations continued throughout the week with little progress. Russia is still not in favor of extending as they are not getting the concession requested.
Ukraine made a deal with other EU countries to move grain through them, on the promise that the grain will only pass through. An agreement to extend the deal for 60 days was reached on May 17.
As of May 4, Argentina’s soybean harvest was estimated at 46% complete versus 59% average.
Corn harvest was estimated at 28% complete versus 37% average. Buenos Aires Grains Exchange left their corn production estimate for Argentina unchanged at 36 million metric tons.
As of May 5, Brazil’s soybean harvest was estimated at 97% complete versus 97% average. First corn crop harvest was estimated at 85% complete versus 87% average.
Brazil continues to have logistic issues as they run out of storage capacity, which has some producers pausing harvest until room can be made for the crop.
The Oklahoma Wheat Commission surveyed their winter wheat crop last week and is looking at much lower-than-expected production due not only to lower yield, but also due to abandonment. Wheat abandonment is expected to reach record levels this year in both Oklahoma and Kansas, which is something the trade was not expecting.
Corn struggled due to pressure being tied to another export cancellation as well as from Monday afternoon’s Crop Progress report, which showed another week of solid planting progress, especially in the central and eastern Corn Belt.
The northern Plains continue to see slow progress as North Dakota has yet to see much in the way of progress while Minnesota and South Dakota have been able to catch up to their average pace. One has to wonder, with the current forecast, will these three states be able to get the projected 1.3 million additional acreage of corn planted? At this point, the market thinks so, or doesn’t care.
Soybeans followed the corn market. Selling was tied to Monday afternoon’s strong planting estimate, as once again soybeans planting pace is ahead of average. The absence of exports is adding pressure to soybeans as South America’s soybeans are much cheaper than the U.S. soybeans. This has many concerned that China could start moving some U.S. exports to Brazil.
Both CONAB and Rosario updated their production estimates for South America. CONAB saw increases for both corn and soybeans while Rosario did not. CONAB is now estimating Brazil’s corn production at 125.5 million metric tons versus 124.8 million metric tons previously and versus USDA’s 125 million metric ton estimate. Brazil’s soybean production is estimated at 154.8 million metric tons versus 153.6 million metric tons previously and versus USDA projection of 154 million metric tons.
Rosario is estimating Argentina corn production at 32 million metric tons, unchanged from their previous estimate and versus USDA’s projection of 37 million metric tons.
Soybean production is estimated at 21.5 million metric tons vs 23 million metric tons previously and versus USDA’s projection of 27 million metric tons.
Friday’s USDA report brought a few surprises to the wheat market, but there were a few for corn and soybeans as well. The report was bullish wheat as production and stocks were trimmed much more than expected. And USDA did not trim old crop exports as the trade had expected. USDA made no changes for the 2022 supply and demand numbers, which was friendly as most were expecting a cut in exports and higher stocks.
All wheat production was estimated at 1.659 billion bushels in 2023, 130 million bushels below expectations and 9 million bushels above last year. All winter wheat production was estimated at 1.13 billion bushels, 100 million bushels below expectations and 26 million bushels above last year. Hard red winter wheat production was estimated at 514 million bushels, 77 million bushels below expectations and 17 million bushels below last year. Soft red winter wheat production was estimated at 406 million bushels, 7 million bushels above expectations and 69 million bushels above last year. White winter wheat production was estimated at 210 million bushels, 31 million bushels below expectations and 26 million bushels below last year. With those numbers, you can estimate other spring wheat and durum production at 529 million bushels, 17 million bushels below last year.
The reason for the cut in wheat production was lower harvested acres. On average, the U.S. harvests 75% to 83% of the winter wheat planted with the long-term average falling at about 78%. This year’s harvest average is estimated at 67% of planted acreage.
World wheat numbers were neutral as 2022 stocks were estimated at 266.3 million metric tons, 1.2 million metric tons above expectations and above last month. This year's world wheat stocks were estimated at 264.3 million metric tons, 4.8 million metric tons above expectations but 2 million metric tons below last year. The decline was due to declining production estimates in many of the major producing countries.
The May report was bearish corn. For 2022, USDA cut corn exports 75 million bushels, which in turn increased stocks the same amount to 1.417 billion bushels, 52 million bushels above expectations.
2023 corn production came in at 15.265 billion bushels, 145 million bushels above expectations and 1.535 billion bushels above last year. Yield was estimated at 181.5 bushels/acre, 0.8 bushels above expectations and 8.2 bushels above last year. If realized this would be a record yield for corn, but not record production. U.S. stocks are estimated at 2.222 billion bushels, 178 million bushels above expectations and 805 million bushels above last year. This is likely the largest production estimate for corn for the year.
World corn numbers were negative as well. 2022 world corn stocks were estimated at 297.4 million metric tons, 1.9 million metric tons above expectations and 2 million metric tons above last month. Brazil’s production was increased to 130 million metric tons, 4 million metric tons above expectations while Argentina’s production was left unchanged.
2023 world corn stocks were estimated at 319.9 million metric tons, 5.1 million metric tons above expectations and 15.5 million metric tons above last year. Huge increases in Argentina’s production were the reason for the increase as it increased 17 million metric tons to 54 million metric tons.
Soybeans supply and demand estimates were also negative. For 2022 USDA increased imports by 5 million bushels, which followed through to increase soybeans stocks by the same amount, putting them at 215 million bushels, 3 million bushels above expectations.
For 2023, soybean production was estimated at 4.51 billion bushels, 16 million bushels above expectations and 234 million bushels above last year. Yield was estimated at 52 bushels/acre, 0.2 bushels above expectations and 2.5 bushels above last year.
This would be a record yield for soybeans. Stocks were estimated at 335 million bushels, 42 million bushels above expectations and 120 million bushels above last year.
2022 world stocks were at 101 million metric tons, 1.9 million metric tons above expectations and 700,000 metric tons above last month. Brazil’s production was increased 1 million metric tons and Argentina’s was left unchanged.
2023 world stocks were estimated at 122.5 million metric tons, an all-time record. This was 15.1 million metric tons above expectations and 21.5 million metric tons above last year. Brazil’s production is estimated at 163 million metric tons, 8 million metric higher while Argentina’s production is estimated at 48 million metric tons, 21 million metric tons higher than last year.
Cattle posted weekly gains with most of the support coming from Friday’s Crop Production report. Friday’s cattle production report estimated 2022 beef production at 28.29 billion pounds, 2023 production at 26.92 billion pounds (up 146 million pounds from April), and 2024 production at 24.75 billion pounds. Light support will come from last week’s solid cash trade as reports had cattle trading between $170 and $178 this week.
“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”