USDA’s first official look at the 2022/23 marketing year is the foundation from which supply and usage estimates will be fine-tuned in the next 16 months. Let’s dive in:
Wheat. Ending stocks are in a downward trend, and elevated wheat prices will not be an anchor to corn or soybean prices.
- A quick resolution to Russia’s war with Ukraine would increase global supplies and open significant downside price risk.
Soybeans. Exports through Aug. 31 were increased 25 million bushels from April. That tightened beginning stocks, but intentions to plant soybeans on 91 million acres provides an unexpected supply-side cushion.
- Despite demand increases and smaller beginning stocks, a bigger soybean crop (up 205 million bushels from 2021) would point carryover up 75 million bushels from the end of the current marketing year.
- If we plant the intended acres, and the trend-line national yield of 51.5 bu. per acre is reachable, prices are likely to drift down. But, if plantings decrease and yields drop, the price trend will be mostly sideways.
- If global vegetable oil trade is further disrupted and USDA demand projections prove conservative, prices will remain high.
- If China makes a move on Taiwan similar to what Russia did to Ukraine, sanctions on China could ransack the soy complex.
Corn. Odds are the old-crop corn export estimate will be pushed up, pulling beginning stocks down 30 million bushels from the current estimate. Growers intend to plant 89.5 million acres to corn. In its May report, USDA cut 4 bu. from the national average trend-line yield (177 bu. per acre would match 2021’s record). That removed 325 million bushels from new-crop supplies.
For demand, USDA slashed 275 million bushels from feed and residual; corn for ethanol was unchanged; corn exports are expected to contract 100 million bushels. All usage estimates are conservative, and carry-
over is expected to fall 80 million bushels.
- If all intended acres are planted and yields are headed to 177 bu. per acre, prices are likely to remain elevated to slow use to the projected levels.
- If plantings push past 90 million acres, expect some price pressure. But, if plantings fall short of intentions due to weather delays, a move to new price highs is likely.
- If use trends higher than projections, higher prices will have to slow demand.
As Farm Journal Economist and host of the “AgriTalk” radio program, Chip Flory helps farmers understand the markets and seize opportunities.
