Market News

Wheat surges post USDA numbers

Soybeans were higher on short covering and technical buying. The USDA’s old crop ending stocks and 2022 production estimates were larger than expected, while new crop stocks were smaller. Of course, those 2022 production and new crop ending stocks estimates are highly subject to change in the coming months. Parts of the region are expected to see more planting delays over the next few days. There were minimal changes to South American production projections, with a slight reduction for Argentina. The Rosario Grain Exchange has Argentina at 41.2 million tons, with harvest 75% complete. CONAB has this year’s crop for Brazil at 123.83 million tons, up 1.1% on the month, but down 10.4% on the year, with harvest at 95% and exports of 77 million tons. China’s Ag Ministry expects producers to plant 18.3% more area to soybeans this year, with production seen at 19.48 million tons. Soybeans were able to shrug off losses in soybean oil and a narrowly mixed finish for bean meal. Old crop soybean exports were a marketing year low as uncertainties continue about demand from China due to COVID issues. The big buyers for old crop were Indonesia and Japan, while unknown destinations topped the list for new crop.

Corn was higher on short covering and technical buying. The USDA numbers were mixed when compared to expectations, with steady old crop stocks, higher new crop stocks, and lower production. U.S. production will continue to be a near-term question mark, with another round of planting delays expected in parts of the Corn Belt over the next few days. Corn production estimates for South America were unchanged from April. The Rosario Grain Exchange maintained its estimate for Argentina at 42.9 million tons, with harvest at 40%. CONAB has total corn production for Brazil at 116.195 million tons, 0.5% higher than April and up 33.4% from 2021, including second crop production of 89.299 million tons, an increase of 0.9% on the month and 47% on the year, with exports of 38 million tons. China’s Ag Ministry is projecting a 1.8% decline in planted area for 2022/23, with production of 272.56 million tons, up on the year on expectations for improved yields. Old crop corn export sales were a marketing year low, with China completely absent due to COVID issues and buyers taking several days off for a holiday. The leading purchasers were Japan and South Korea, with a substantial cancellation by unknown destinations. China did buy 612,000 tons of U.S. corn Thursday morning, with 68,000 tons for 2021/22 and 544,000 tons for 2022/23. China has increased purchases of U.S. corn recently with Ukraine almost totally absent from the market following Russia’s invasion.

The wheat complex was sharply higher on commercial and technical buying. The USDA’s old and new crop U.S. ending stocks and winter wheat production estimates were all lower than expected. 2022 U.S. winter wheat production is expected to be down 8% from 2021, with the possibility of further losses due to drought in the U.S. Plains and the potential for the highest acreage abandonment in 20 years. The USDA is also projecting year-to-year declines in global new crop production and carryout. That adds up to a more bullish world supply and demand situation than we’ve seen in quite some time. With less than a month left in the current marketing year, wheat export sales were a marketing year low at a paltry 500,000 tons and new crop sales weren’t great either. The expected pick-up in demand for U.S. wheat because of Russia’s invasion of Ukraine hasn’t happened, at least not yet, because of relatively high U.S. prices and increased competition from other suppliers, including India. India’s government expects to export 10 million tons of wheat in 2022/23. The Rosario Grain Exchange sees Argentina’s 2022/23 wheat crop at 19 million tons, 3.1 million less than the last guess, due to lower planted area.