USDA’s monthly report in April covers only old crop. New crop numbers will show on May 10. Adjustments to feed/residual can be seen on this report for corn and wheat via the recent March 28 Grain Stocks report. Adjustments to South American crops are the other focus.
Corn:
USDA lowered US ending stocks by 50 million bushels from the prior month to 2.122 billion. The trade estimate was 2.102 (ALDL 2.097). As typical after a quarterly Grain Stocks report USDA started with a feed/residual adjustment, in this case +25 million bushels. Some would suggest their current 5.700 billion bushel estimate is a little too low at only +4% from last year. That statement could be made considering the first half of the year has run +10%. Given that there is little consistency between first half and second half feed/residual we’ll hold from expecting anything major. USDA also adjusted their annual corn for ethanol use today, +25 million bushels. Usage in the first half of the year has been much better than expected. 2.714 billion bushels were used September – February, +6.5% year/year. Not only has general ethanol production been a positive surprise but production efficiency has been lower this year. Some would note there may be further increases for USDA given their whole-year goal is +4.3% year/year. On this report USDA choose to their export view unchanged. While we did expect that on this report we have moderate concerns about declines in the months ahead. The prior 11 weeks saw new sales -2% from the five year average. Today’s weekly export sales report was a problem at -69% from average. It was the lowest sale for this specific week in 11 years. If remaining sales “improve” to even with average then we’ll miss USDA’s goal by 71 million. There will be further changes to demand numbers in the months ahead. Corn for ethanol will be raised while exports will be lowered, it won’t change the general old crop story. In the coming weeks the majority of price movement comes from new crop news. As it stands right now trend yields would imply another well-supplied story with stocks at 2.291. If there were no risk-on yield threats, then harvest prices for both July and December futures would run sub-$4.00. We do expect a moderate short term rebound in the coming weeks associated with spring/summer risk-on activity.
World corn ending stocks were lowered from 319.6 million tonnes to 318.3. USDA chose to leave their controversial Brazil crop view unchanged at 124 mt. The trade expected 121.8. There is still a long running dispute between USDA and Conab. Today Conab lowered their 112.753 view to 110.964. The Argentine crop decline, -1 mt, was the expectation. There were no changes for USDA’s view of China’s old crop situation. We will point out they held their view of Chinese imports of 23 mt. China’s own supply/demand report this morning raised their view from 17.5 to 20.
Soybeans:
2023/24: USDA raised US old crop soybean stocks by 25 million bushels today, now 340. The trade estimate was 317 (ALDL 340). Imports were lowered by 5. There was no change to crush today. That category will have to raised eventually. The year to date production pace is +5.4% year/year, over USDA’s current view of 4.0%. We expect an eventual increase for this category from 27 to 60 million. While crush is a good story it is only a moderate offset to the real problem, exports. A decline of 20 million bushels from USDA this morning is still not enough. To hit USDA’s current goal the remainder of the year needs to run +29% vs. the five year average. Over the past 12 weeks they are -60%. If remaining sales run even to -40% vs. normal then this category still has declines ahead, -51 to -122. Minor changes were also noted today for the seed and residual numbers. An old crop stock of 340 million, and our 412 view for new crop assuming trend yields, does not allow for any real rally. Eventual harvest lows for November would run $10.80. A minor summer risk-on story would allow current prices near $11.50. Our similar year studies suggest a larger short term premium into spring.
World ending stocks were lowered from 114.3 million tonnes to 114.2. Unlike with corn there was no lowered Argentine estimate. The problem, like corn, is with no change today in their prior 155 mt view. Conab is down there at 146.522. There were no changes to USDA’s view of China’s old crop balance sheet.
Wheat:
2023/24: US wheat ending stocks were raised by 25 million bushels to 698 million. The trade estimate was 690 (ALDL 683). Imports were lowered by 5 today. Feed/residual was lowered by 30 given the recent Grain Stocks report. USDA chose to leave exports unchanged. Though we would be a little behind their current goal given long term shipment numbers we will note the past three weeks have been able to meet it. US wheat prices are taking their cue from world pricing. Russian and EU prices have lightly recovered from major lows in March.
World wheat ending stocks were lowered from 258.8 to 258.3 million tonnes. The only production area we were monitoring on this report was India. USDA kept their 110.6 estimated unchanged. Private sources are at 105 and 106.