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By Tori Uhland

July 5, 2023

There are a few key USDA reports every year that the trade keeps a close eye on. The June Quarterly Stocks and Planted Acres reports are a couple of them. This year, the trade wasn’t expecting many surprises, but that proved to be an incorrect assumption when the numbers were released on Friday.

Wheat numbers weren’t all that surprising. Abandonment estimates were lowered and harvested acres were up slightly. Otherwise, it was pretty much a non-event for all wheat classes. The real surprises came from corn and soybeans.

Average trade estimates for planted corn and soybean acres reflected mostly unchanged numbers from the USDA’s March estimates, so it was a shock when corn acres were raised sharply while soybean acres were lowered sharply. Planted wheat acres were mostly unchanged, but harvested area expectations were increased.

Corn stocks were fundamentally supportive as the USDA came in at 4.106 billion bushels, which was 149 million bushels below the average trade estimate of 4.255 billion and down from last year’s 4.349 billion. The USDA does have some revising to do in upcoming reports with their feed/residual use numbers as their current estimates are not achievable when looking at the actual statistics compared to last year. The downside in the corn market came from the USDA raising the planted acres for the 2023/24 crop by 2.1 million acres to 94.096 million, which was 2.2 million above the average trade estimate. The USDA is still estimating a 181.5 bushel per acre yield, but many analysts think a 175 bushel per acre crop is more reasonable (and still possible with recent rains in the corn belt). Using the new acres and a 91.7 harvesting percentage (which would be the highest in 6 years) it basically adds 385 million bushels to the new crop balance sheet. This caused December corn to fall to its lowest level since October 2021. The USDA will update their balance sheet ideas in the July 12 WASDE report. The extra planted acres of corn has discounted a large part of the lost production of the drought, but we aren’t quite out of the woods yet. Only time will tell.

After Friday’s report and huge cut to planted acre estimates, the 2023/24 marketing year for soybeans has gone straight back into a full demand-rationing situation. The rationing will probably have to come from exports as crush demand is expected to continue with increasing biodiesel production. The USDA’s acreage estimate of 83.505 was nearly 4.2 million acres below the average trade estimate…which begs the question, how did the USDA miss by four million acres of soybeans and 2 million acres of corn?

At this point, nothing is certain in terms of production, demand, or anything else. The trade continues to keep an eye on weather forecasts in the Midwest, though the National Weather Service is calling for a big decrease in drought area over the month of July. Keep an eye out for the July 12th World Agriculture Supply and Demand Estimates (WASDE) report as that may help answer some questions about the U.S. and world balance sheets as well as move the markets some more.

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