Written Commentary
SOYBEANS
Old crop soybean ending stocks rose 5 mil. bu. to 215 mil., in line with expectations. The only change in the balance sheet was a 5 mil. bu. increase in imports to 20 mil. bu. Both soybean oil and soybean meal ending stocks were steady however both featured modest import and usage adjustments. 2023 production was estimated at a record 4.510 bil. bu. with an average yield of 52 bpa, matching the record yield from 2016. Usage was estimated at 4.411 bil. resulting in ending stocks growing to 335 mil. bu., roughly 50 mil. bu. above the average est. If verified ending stocks would be the highest in 5 years. Soybean oil usage for biofuel in 2023/24 is forecast at 12.5 bil. lbs. up from 11.6 bil. in 22/23. New crop soybean meal exports are forecast to jump to 14,800 tons, up from 13,800 in 22/23. Old crop 2022/23 world ending stocks rose 2 mmt to 297.4 mmt, above expectations for a 1 mmt reduction. Surprisingly the USDA made no change to Argentina’s production forecast of 37 mmt. Brazil’s production rose 1 mmt to 155 mmt. New crop 2023/24 world stocks are forecast at a record 122.5 mmt, above the range of estimates. Brazil’s production is forecast to rise to 163 mmt next year, while Argentina if forecast to rebound back to 48 mmt from this year’s drought ravaged crop. Chines imports for 2023/24 are expected to rise to 100 mmt, up from 98 mmt in 2022/23.
CORN
Old crop corn ending stocks rose 75 mil. bu. to 1.417 bil., 60 mil. bu. above expectations. The only change to the balance sheet was a 75 mil. bu. reduction in exports. 2023 production was est. at a record 15.265 bil. with an average yield as a record at 181.5 bpa. New crop usage is forecast at 14.485 bil. resulting in ending stocks swelling to 2.222 bil. If realized stocks would be the highest in 5 years. 2022/23 world stocks rose 2 mmt to 297.4 mmt, vs. expectations for a 1 mmt decline. Surprisingly the Argentine production forecast was left unchanged at 37 mmt. Brazil production rose 5 mmt to 130 mmt, while their exports rose 3 mmt to 53 mmt. The USDA is carrying very optimistic corn and soybean production forecasts for 2023/24. 2023/24 world stocks were estimated at 313 mmt, 5.5 mmt above expectations and also a 5 year high. Chinese imports are forecast to rebound to 23 mmt in 2023/24, up from 18 mmt in 22/23 and also above the 22 mmt in 21/22. After initially breaking right after the USDA data, July-23 corn surged back to close higher drawing support from the bullish wheat trade and strong basis. Dec-23 corn fell to its lowest level since Jan-22 under the weight of new crop supplies.
WHEAT
Old crop wheat ending stocks were unchanged at 598 mil. bu. in line with expectations. The only old crop change was a 7 mil. bu. reduction in durum stocks, offset by higher HRW stocks. All wheat production was estimated at 1.659 bil. Winter wheat production was forecast at 1.130 bil. bu. roughly 90 mil. bu. below expectations. By class production was HRW 514 mil. 74 mil. below est., SRW 406 mil. 10 mil. above est., and white winter at 210 mil. 28 mil. below est. The USDA was aggressive early in slashing harvested acres in the Southern plains. Only 67.4% of the planted WW acres are expected to be harvested, the lowest level in since at least 2007. New crop usage is forecast at 1.837 bil. with ending stocks falling to 556 mil., 50 mil. below expectations and if realized would be a 16 year low. 2022/23 world stocks rose 1 mmt to 266 mmt, slightly above expectations. World 2023/24 stocks forecast at 264 mmt, slightly above expectations. July-23 KC stopped just shy of trading $9.00 for the time since Nov-22. It’s premium over Chicago surged nearly $.70 this week to $2.42 bu. The USDA isn’t expected to release new crop by class wheat balance sheets until the July-23 WASDE.
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