USDA released its October World Agricultural Supply and Demand Estimates (WASDE) report this morning. The monthly WASDE reports typically are big market movers, and the latest one didn’t disappoint in that regard. Soybean prices showed the most upside after USDA reported lower-than-expected yields and production. But supply and demand data didn’t prove as helpful for corn and wheat prices. Corn prices hovered near even by the close, while wheat losses mostly ranged between 1% and 1.9%.
Some rains will continue to move through the eastern Corn Belt, Mid-South and Southeast between Thursday and Sunday, while areas farther west will remain dry during this time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts more seasonally dry weather in store for the central U.S. between October 19 and October 25, with warmer-than-normal conditions returning to the Plains next week.
Is rainy weather slowing down fieldwork this week, or is harvest progressing as planned? Click this link to take the survey and share updates about your farm’s crop development. Farm Futures grain market analyst Jacqueline Holland regularly reviews and uploads results to the FFTF Google MyMap, so farmers can keep current with peer anecdotes from around the country.
On Wall St., the Dow tested modest gains, moving 94 points higher to 29,333 in afternoon trading as investors await tomorrow’s highly anticipated consumer price index updates. Energy futures were mixed Crude oil sank 2.25% lower to $87 per barrel this afternoon, while diesel and gasoline both moved slightly higher. The U.S. Dollar softened slightly.
On Tuesday, commodity funds were net buyers of soybean (+1,250) contracts but were net sellers of corn (-3,500), soyoil (-1,000) and CBOT wheat (-27,500). Funds were roughly even when trading soymeal contracts yesterday.
CORN
Corn prices weren’t phased much by today’s supply and demand data from USDA (click here for our complete coverage and exclusive analysis). December futures held steady at $6.93, while March futures eased 0.25 cents lower to $7.00.
Corn basis bids were mostly steady across the central U.S. on Wednesday but did tilt 5 cents lower at an Indiana ethanol plant today.
USDA’s new outlook offered a mixed bag of data in today’s WASDE report, including “reduced supplies, greater feed and residual use, lower exports and corn used for ethanol and smaller ending stocks.” The agency lowered production estimates by 59 million bushels to 13.895 billion and assumes average yields will fall to 171.9 bushels per acre versus an average trade guess of 179.8 bpa.
Corn export estimates fell by 126 million bushels, which USDA attributes to both smaller supplies and sluggish early season demand. Feed and residual use firmed by 50 million bushels, while corn used for ethanol fell by the same amount. Ultimately, supply fell more than use, so USDA trimmed 2022/23 ending stocks by 57 million bushels to 1.172 billion bushels.
Analysts thought USDA would hold corn quality ratings steady this past week, with 52% of the crop in good-to-excellent condition. However, the agency boosted ratings two points higher in Monday afternoon’s crop progress report, to 54% in good-to-excellent condition. Another 26% was rated fair (down a point from last week), with the remaining 20% rated poor or very poor (also down a point from last week).
Physiologically, 87% of the crop is fully mature, up from 75% and slightly ahead of the prior five-year average of 85%. Harvest is also slightly ahead of the prior five-year average, with 31% completion through Sunday. However, analysts were hoping to see even more progress this past week, offering an average trade guess of 34%.
China’s 2022/23 corn production is expected to reach 10.730 billion bushels, according to the latest estimates from the country’s agriculture ministry. Despite that impressive amount, China will still import an estimated 866.1 million bushels of corn this marketing year. Brazil could prove to capture a bigger market share as early as December as China moves to reduce dependence on U.S. grain and seek less volatile options from outside the Black Sea region. Click here for more on that latest trend.
Taiwan purchased 2.6 million bushels of animal feed corn, likely sourced from Brazil, in an international tender that closed earlier today. The grain is for shipment in December.
Preliminary volume estimates were for 304,846 contracts, moving well above Tuesday’s final count of 219,363.
SOYBEANS
Soybean prices made solid inroads after supportive production and yield data (each of which USDA unexpectedly lowered) triggered a round of technical buying on Wednesday. A large sale to China announced this morning generated additional tailwinds. November futures rose 19 cents to $13.9525, with January futures up 16.25 cents to $14.0425.
Soybean basis bids trended 5 cents lower at two Midwestern processor and 5 cents higher at an Illinois river terminal while holding steady elsewhere across the central U.S. on Wednesday.
Private exporters announce the sale of 19.3 million bushels of soybeans for delivery to China during the 2022/23 marketing year, which began September 1.
USDA trimmed its soybean production forecast by 65 million bushels to 4.3 billion bushels. Average yields dropped 0.7 bushels per acre to 49.8 bpa, which was notably lower than the average trade guess of 50.6 bpa. Harvested area remained unchanged, at 86.6 million acres. Exports fell by 50 million bushels to 2.05 billion bushels, with USDA citing increased competition from South America. The agency left ending stocks steady at 200 million bushels.
The 2022 soybean harvest progress doubled from 22% last week to 44% through October 9. That puts this year’s efforts behind 2021’s pace of 47% but ahead of the prior five-year average of 38%. It was also three points ahead of the average trade guess of 41%. Nearly all (91%) is now dropping leaves, up from 81% a week ago.
From a quality standpoint, USDA bumped ratings two points higher, with 57% of the crop now in good-to-excellent condition. Analysts thought the agency would hold ratings steady. Another 28% of the crop is rated fair (down a point from last week), with the remaining 15% rated poor or very poor (also down a point from last week).
Preliminary volume estimates were for 387,997 contracts, which nearly doubled Tuesday’s final count of 195,557.
WHEAT
Wheat prices sank lower after USDA reduced its export estimates due in part that U.S. grain is uncompetitively priced on the world market. December Chicago SRW futures fell 17.25 cents to $8.8375, December Kansas City HRW futures lost 18.25 cents to $9.7250, and December MGEX spring wheat futures dropped 11.5 cents to $9.7375.
USDA’s WASDE outlook for wheat notes lower supplies, domestic use, exports and stocks. Production fell by 133 million bushels to 1.650 billion, which the agency says “leaves production only minimally higher than last year.” Feed and residual use fell 30 million bushels to 50 million, which USDA reports is the lowest first-quarter total disappearance since 1983/84.
Wheat export estimates fell 50 million bushels to 775 million, due to “reduced supplies, slow pace of export sales and continued uncompetitive U.S. export prices.” If the current pace holds up, U.S. wheat exports would fall to the lowest levels since 1971/72.
Winter wheat plantings for the 2022/23 season are running a bit behind the pace of recent years, moving from 40% a week ago to 55% through October 9. That puts this year’s pace three points behind both 2021 and the prior five-year average, which are both 58%. Crop emergence improved from 15% a week ago up to 26% through Sunday. That’s six points behind the prior five-year average of 32%.
European traders are reporting that Algeria purchased as much as 18.7 million bushels of milling wheat from optional origins in an international tender that closed on Tuesday. Likely sources include Russia, Romania, Bulgaria and France.
Japan is planning to hold a simultaneous buy-and-sell auction on October 19 and hopes to purchase 2.6 million bushels of feed wheat and 1.8 million bushels of feed barley. The grain is for arrival in late February.
Preliminary volume estimates were for 77,726 CBOT contracts, spilling moderately below Tuesday’s final count of 105,777.
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Afternoon report: USDA’s latest supply and demand data handed out some wins – and losses
