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USDA reports confirm that corn and wheat stocks have tightened

USDA’s September Crop Production report took the market by surprise. Everyone was looking one direction while USDA took us in the opposite direction, which resulted in Monday’s market action. To sum up the report in a few words: uneventful and neutral wheat, friendly and as expected for corn, and bullish and surprising for soybeans.

The September 2022 USDA Crop Product and World Agricultural Supply and Demand Estimates reports were surprisingly bullish soybeans.
Erin Ehnle Brown / Grand Vale Creative LLC
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Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at agweek.com.

The grains pushed higher to close out the first week of September with most markets posting strong weekly gains. Soybeans were the only market to close the week lower, but losses were trimmed by a stronger performance to close out the week.

In a speech Thursday, Sept. 8, Federal Reserve Chairman Jerome Powell made it clear that the Fed is looking at increasing interest rates 0.75% at the end of the month. This would follow suit with EU’s recent 0.75% increase and Canada’s likely increase of the same.

Profit taking and the need for producers to even up positions ahead of the Sept. 12 Crop Production report were the main drivers, along with continued noise from Putin. It is very likely Putin will not renew the agreement allowing Ukraine to ship grain out of the Black Sea.

Wheat saw pressure from updated production estimates from Brazil and Russia. Brazil is on a path to increase production of wheat with the goal of becoming self-sufficient. CONAB increase Brazil’s wheat production estimate to 9.37 million metric tons, an increase of 22%. IKAR also report Russia had already harvested 86 million metric tons of wheat and followed that up by increasing production to 97 million metric tons.


Soybeans were able to shake of the negative news of more COVID lockdowns in China, increased selling out of Argentina as the government there stages a fire sale in an attempt to decrease farmer held soybeans stocks, and expectations of the record U.S. crop.

USDA’s September Crop Production report took the market by surprise. Everyone was looking one direction while USDA took us in the opposite direction, which resulted in Monday’s market action. To sum up the report in a few words: uneventful and neutral wheat, friendly and as expected for corn, and bullish and surprising for soybeans.

USDA made no changes to the wheat numbers, leaving both 2021 and 2022 U.S. supply and demand estimates unchanged. The only adjustment made to wheat as a decline in 2022’s national average price, which dropped 25 cents to $9.

On the world stage, USDA increased world ending stocks 1.3 million metric tons to 268.6 million metric tons, 400,000 metric tons above expectations. The biggest adjustments came in Russia’s production (increased 3 million metric tons) and Ukraine’s production (increased 1 million metric tons). The increase in Ukraine is questionable as officials in Ukraine are estimating acreage will decline 30% this year.

USDA appeared to have been a little reluctant to make changes in wheat’s estimates ahead of the Annual Small Grains Summary, which will be released Sept. 30. USDA will also release their Quarterly Grains Stocks estimate that day so it stands to reason to delay any Supply and Demand adjustments until that report is released.

Monday afternoon’s Crop Progress report did not do much to help wheat. Spring wheat harvest progress was estimated at 85% complete, which was 2% ahead of expectations but 4% behind the average pace. Winter wheat seeding was reported at 10% complete, which was as expected and 3% ahead of average.

Corn’s September Crop Production estimate made multiple reductions. For old crop 2021, USDA cut ethanol demand 20 million bushels but increased exports 25 million bushels. The net change was a 5 million bushels cut in ending stocks, now estimated at 1.525 billion bushels, 15 million bushels below expectations.

For 2022, USDA cut planted acreage 1.2 million and harvested acreage declined 1 million acres. Acreage was either left unchanged or lowered in every state except Illinois, Indiana, Iowa, Kansas, and Michigan. As expected, corn’s yield dropped 2.9 bushels to 172.5 bushels. The net result put corn production at 13.944 billion bushels, 415 million bushels below August’s estimate and 151 million bushels below expectations.


On the demand side, USDA lowered feed use 100 million bushels, ethanol 50 million bushels, and exports 100 million bushels. That 250 million bushel cut in demand resulted in ending stocks only dropping 169 million bushels to 1.219 billion bushels, which was only 5 million bushels below expectations. The national average price increased 10 cents to $6.75.

On the world stage, corn ending stocks were estimated at 304.5 million metric tons, 2.2 million metric tons above expectations but 2.2 million metric tons below last month. The biggest changes in world corn production were from China (increased 3 million metric tons) and Ukraine (increased 1.5 million metric tons).

Monday afternoon’s Crop Progress report was friendly corn as it showed another decline in crop ratings. Corn’s crop condition rating dropped 1% to 53% good/excellent while the trade was looking for conditions to be steady. The states that saw declines in crop ratings were Iowa (-3%), North Dakota (-3%), and South Dakota (-5%). Harvest activity showed up in the report as 5% of the nation’s corn in now in the bin versus 4% average.

The bullish surprise in the report came in soybeans. The entire trading world was looking for USDA to come with friendly number for corn and neutral to challenging estimates for soybeans. But instead, USDA came with bullish estimates for soybeans, putting the stocks to use ratio at 4.5%, the lowest in 9 years.

Soybeans did not get off to a good start, if you looked at the 2021 projections. USDA lowered exports 15 million bushels and increased residual 1 million bushels. The net change was a 15 million bushel increase in ending stocks, putting them at 240 million bushels, 5 million bushels above expectations.

But the surprises came in the 2022 production estimates. USDA cut planted and harvested acreage 600,000 acres, which was 662,000 acres more than expected by the trade (which was looking for an increase in harvested acreage). The national average yield also saw a cut of 1.4 bushels, putting it at 50.5 bushels, 1 bushel less than expected. This put production at 4.378 billion bushels (no longer a record production), 153 million bushels below the August estimate and 118 million bushels below expectations.

On the demand side, USDA lowered crush 20 million bushels, exports 70 million bushels, and residual 3 million bushels. This put ending stocks at 200 million bushels, 45 million bushels below the August estimate and 49 million bushels below expectations.

On the world stage, world stocks were estimated at 98.9 million metric tons, 2.4 million metric tons below expectations and 2.5 million metric tons below the previous month. China’s imports were cut 1 million metric tons.


Monday afternoon’s Crop Progress report added to the friendly theme for soybeans as conditions dropped 1% to 56% good/excellent. the trade was expecting conditions to remain steady. Iowa (-3%) and South Dakota (-1%) were the only states to see declining ratings.

But the gains were tested Tuesday, Sept. 13, with pressure coming from the Consume Price Index estimate. The CPI came in at 8.3% versus estimates of 8.1%. That news sent the U.S. dollar sharply higher and the Dow sharply lower, which in turn spilled over to pressure corn and soybeans. Surprisingly wheat held onto gains. By the time the dust settled, the dollar was up over 1.5 cents, and the Dow down 1,200 points. Traders are now looking for the Fed to increase interest rates one full point in the next Fed meeting.

Technical selling added pressure as corn could not push above $7, and although soybeans broke above $15, they could not close above those levels. With harvest right around the corner, it might be hard for corn and soybeans to break above those psychological levels, unless some other unforeseen bullish news hits the market in the short term.

Cattle pushed higher the first week of September due to strong demand as July exports were estimated at over $1 billion. This marks the sixth time this year beef exports have broken above that level. But cattle were unable to hold onto the gains with selling tied to the higher-than-expected CPI estimate. The much higher than expected inflation estimate has traders worried beef demand will slow down due to increasing interest rates, decreasing disposable income, and slow down in beef demand. Supplies will continue to be tight, but the thought is if demand slows down, supplies will be adequate to meet demand in the short term.

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