Corn ending stocks well below expectations

CHARLOTTE, Mich. — Now that the risk of old crop surprises is out of the way, the market now turns its attention to yield adjustments in the October crop production estimates — that is, if the U.S. Department of Agriculture is open for business.

Angie Setzer, cofounder and partner at Consus, hosted a live podcast on Twitter when the USDA released its quarterly stocks report and small grains summary estimates Sept. 29.

Here’s what she had to say based on the data from the reports that reflected grain stocks at the end of the 2022-2023 marketing year.

On Corn

Old crop corn crop quarterly stocks in all positions totaled 1.36 billion bushels. That came in quite a bit lower than what traders were expecting, about 69 million bushels off from what traders were expecting.

The carryover was lower than what we saw a year ago. The last USDA world agricultural supply and demand estimate was at 1.452 billion.

So, what we’ll see happen in the next WASDE report is USDA will adjust beginning stocks 90 million bushels lower. So, it can be 2.1 billion bushels now instead of 2.2 billion on new crop until they make some sort of adjustments.

On Soybeans

Old crop soybeans quarterly stocks totaled 268 million bushels. That came in higher than expected. Traders were expecting 242 million bushels.

That will be tied directly to carry-in. It’s only an 18 million bushel adjustment on old crop ending stocks from what USDA had in the last WASDE, but it is there.

USDA revised 2022 soybean production, lowering it by about 6 million bushels from the previous estimate. Planted soybean acres was unchanged for last year, but USDA did change harvested acres and adjusted yield up one-tenth of a percent.

Soybeans is where it kind of hurts a little bit even though we’re really not talking an expensive miss by the trade or even by the USDA. Old crop ending stocks are coming in at 268 million bushels.

Traders had anticipated 242 million, so it’s about 26 million higher than what the traders had thought, and that will be an 18 million bushel increase to old crop ending stocks from the September WASDE and new crop carry-in.

On Wheat

Wheat quarterly stocks came in higher than what traders were expecting at 1.78 billion bushels. Traders anticipated 1.72 billion.

We saw higher than expected winter wheat production and spring wheat production came in higher than expected, as well. Durum came in relatively close of what was anticipated.

USDA did make some minor adjustments to last year’s wheat production, but nothing crazy.

In the small grains summary, all wheat produced totaled 1.8 billion bushels. That was up a bit higher than what traders were expecting.

Winter wheat production came in a 1.248 billion bushels. Traders were expecting 1.22 billion.

On Looking Ahead

As we move ahead, we turn our attention basically to what happens in the world cash market and what is taking place overall there.

One of the things that we continue to read about is how the world seems to be not necessarily awash in wheat.

If you look at global ending stocks, we actually have relatively tight supplies in what would be our traditional exporter supply structures.

But with Russia in offering wheat cheaper and (filling the gap left by the shortfall from) Ukraine and some of these things where we see these price floors continue to erode, the problem is it’s really only worth what the cheapest price a buyer is able to buy.

Now, of course you have to take in consideration quality which the U.S. strives in and logistical capacity which we have, but from an overall standpoint how we’re going to start to pay attention to what happens from a world demand standpoint.

We’ve got the risk of surprise out of the way when it comes to old crop stuff. So, now the big question is what do we find NASS when we start to do kernel weights, pod weights the and things of that nature and make some yield adjustments here in October, if the USDA is open.

The last time we had a government shutdown we basically traded a 10-cent range in corn for over 30 days.

From an overall standpoint, what they do now is they remove the risk of a huge surprise and now unfortunately though we have to look at world demand that that isn’t great.