FOCUS ON AG
July 18, 2022
JULY 12 WASDE REPORT OFFERS LITTLE CHANGE
The USDA World Supply and Demand (WASDE) Report released on July 12 came out pretty much as expected, which included increased corn acreage and decreased soybean acreage, based on the June 30th USDA crop acreage report data. The WASDE report also made some adjustments to the 2022-23 corn and soybean ending stocks. Most grain marketing analysts viewed the latest WASDE report as somewhat “bearish” for future corn markets and generally “neutral” for soybean and wheat markets. Grain prices were down sharply initially following the release of the WASDE report; however, the prices had started to rebound as of July 18, due to a strong highpressure ridge that was bringing a very hot and dry weather pattern across much of the Corn Belt.
Following is a summary of the July 12 WASDE Report:
Based on the July 12 WASDE report, USDA is projecting that 2022-23 corn ending stocks will be 1.47 billion bushels by August 31, 2023, which is an increase of 70 million bushels in the carryover level from the June WASDE report. The estimated corn ending stocks for 2021-22 were increased by 25 million bushels to 1.51 billion bushels, which compares to corn ending stocks estimate compares to 1.24 billion bushels in 2020-21, 1.92 billion bushels in 2019-20, and 2.19 bushels in 2018-19. The projected U.S. corn supply for the balance of the 2021-22 marketing year remains quite tight, which is likely to maintain strong support for day-to-day cash corn prices; however, the premium for “old crop” corn prices will likely start to diminish as we get closer to the 2022 corn harvest season.
The 2022-23 carryover level is based on June 30th USDA corn acreage estimate of 89.9 million planted corn acres and 81.9 million harvested acres in the U.S. in 2022, with an average U.S. corn yield of 177 bushels per acre, which matches the 2021 record U.S. average corn yield. This resulted in an estimated 2022 total corn production of 14.5 billion bushels, which was up 45 million bushels from the June report. The 2022 total U.S. corn production compares to 15.1 billion bushels in 2021, 14.1 billion bushels in 2020, 13.6 billion bushels in 2019, and 14.3 billion bushels in 2018. The total corn usage for 2022-23 is estimated at 14.57 billion bushels, which would be slightly lower than the estimated total corn usage of just 14.8 billion bushels for both 2021-22 and 2020-21.
USDA is now projecting 2022-23 market year average (MYA) corn price at $6.65 per bushel, which is a decrease of $.10 per bushel from the June WASDE report. The marketing year for the 2022 crop year will run from September 1, 2022 through August 31, 2023. The final 2021-22 national MYA price is estimated at $5.95 per bushel, which is unchanged from June projection. This follows corn MYA prices of $4.53 per bushel in 2020-21, $3.56 per bushel in 2019-20, $3.61 per bushel in 2018-19, and $3.36 per bushel in 2017-18.
Soybeans Based on the soybean acreage adjustments in the June 30th crop acreage report, USDA is now estimating 2022 U.S. planted soybean acreage at 88.3 million acres in the latest WASDE report, which is an increase of 1.1 million acres from the 2021 soybean acreage of 87.2 million acres. The projected 2022 U.S. soybean acreage still trails the soybean acreage of 89.2 million acres in 2018 and the record soybean acreage of 90.2 million acres in 2017. The July 12 th WASDE report projected a U.S. average soybean yield of 51.5 bushels per acre in 2022, which was unchanged from the June report and is very close to final 2021 U.S. average soybean yield of 51.4 bushels per acre. Total U.S soybean production for 2022 is now estimated at just over 4.5 billion bushels, which would be an increase from the U.S. soybean production of 4.43 billion bushels in 2021. If the 2022 production comes to fruition, it could approach the record U.S. soybean production of 4.54 billion bushels in 2018.
USDA is now estimating soybean ending stocks at the end of the 2022-23 marketing year to be at 230 million bushels, which is down 50 million bushels from the June estimate. The 2022-23 carryover level compares to the estimated soybean ending stocks of 215 million bushels for 2021-22 and 257 million bushels in 2020-21 but is well below the large soybean carryover levels in other recent years. USDA is projecting total soybean usage for 2022-23 to match estimated 2022 soybean production level at just over 4.5 billion bushels, which is nearly the same as the expected soybean usage level of 4.49 billion bushels for 2021-22. Even though the 2022 soybean acreage and production levels were reduced from the June WASDE report, the 2022-23 carryover levels showed only a small decline, due to estimated reductions of 10 million bushels in the soybean crush level and 65 million bushels in soybean export levels for 2022-23.
USDA is estimating the national MYA soybean price for the 2022-23 marketing year at $14.40 per bushel, which is a decrease of $.30 per bushel from the June WASDE report. This compares to an estimated soybean MYA price of $13.35 per bushel for the 2021-22 marketing year, which ends on August 31, 2022. The current soybean MYA price projections compare to other recent final MYA prices of $10.80 per bushel in 2020-21, $8.57 per bushel in 2019-20, $8.48 per bushel in 2018-19, and $9.33 per bushel in 2017-18.
Corn and soybeans usually gather the most interest in the mid-summer monthly WASDE reports; however, wheat has grabbed considerable notice in recent WASDE reports due to the ongoing war between Russia and Ukraine, two countries that are very important in the world wheat market. Based on the July WASDE report. total U.S. wheat production for 2022 was listed at 1.78 billion bushels, which was an increase of 44 million bushels from the June report. The latest WASDE report estimated the U.S. average wheat yield for 2022 at 47.3 bushels per acre, which represented an increase of .4 bushels per acre from the June report.
The 2022-23 wheat ending stocks are projected at 639 million bushels, which compares to 660 million bushels in 2021-22 and 845 million bushels in 2020-21. Global wheat stocks have been estimated to increase slightly in recent WASDE reports; however, the world wheat supplies remain quite tight and are highly volatile depending on how the Russian war in Ukraine unfolds over the coming months.
The 2022-23 marketing year for wheat runs from June 1, 2022 through May 31, 2023, with the 2022-23 MYA wheat price currently projected at $10.50 per bushel, which was lowered by $.25 from the June WASDE report. The final 2021-22 MYA price for wheat was $7.63 per bushel, which compares to $5.05 per bushel in 2020-21, $4.58 per bushel in 2019-20, $5.16 per bushel in 2018-19, and $4.72 per bushel in 2017-18.
There are still a lot of questions yet to be answered regarding both the supply and demand figures for 2022-23 in future WASDE reports. Based on the hot and dry weather conditions that appear to be setting in across much of the Corn Belt in mid-July, weather forecasts and crop production potential will likely be weighing heavily on the marketing decisions of grain traders in the coming weeks. This could result in a high level of volatility in commodity markets in the coming weeks, depending on day-to-day weather forecasts.
Some private analysts feel that the final 2021 U.S. corn and soybean yields may be over-estimated by USDA, especially if drought conditions continue to expand and worsen in some portions of the Midwest. The combination of inflation, the rising value of the U.S. dollar, and the overall U.S. world economy also raises questions with regards to future corn and soybean demand, especially for export markets. Corn and soybean export levels have remained quite solid in the past couple of years, even with the higher commodity price levels, due to concerns over world grain supplies.
Note — For additional information contact Kent Thiesse, Farm Management Analyst and Sr. Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960) E-mail — email@example.com) Web Site — http://www.minnstarbank.com/