The initial production numbers on this year’s U.S. corn and soybean crops from the USDA were as expected. The USDA pegged this year’s corn yield at 179.5 bushels per acre for a 14.99 billion bu (bbu) crop. This compares to last year’s corn crop of 14.18 bbu. The initial soybean production numbers are for a yield of 50.8 bushels per acre and a crop size of 4.4 bbu. Last year’s U.S. soybean crop totaled 4.14 bbu. Total wheat production in the United States is estimated at 1.87 bbu compared to 1.83 bbu a year ago.

The only changes to old crop balance sheets took place to the grains. Corn exports were raised 100 million bu (mbu) and industrial use decreased 5 mbu for a 95 mbu reduction to ending stocks. This put our carryout estimate at 1.25 bbu and matched trade guesses. The initial new crop carryout estimate on corn is for 1.5 bbu which was just above trade estimates. The USDA is predicting higher domestic use of the 2021/22 corn crop, but fewer exports.

The old crop wheat carryout was bumped up by 20 mbu as trade reduced both imports and exports, and also food use. This leaves old crop wheat carryout at an adequate 872 mbu. New crop wheat carryover was pegged at 774 mbu as the USDA is predicting higher feed and residual usage but lower exports.

The USDA made no changes to old crop soybean balance sheets, which was not surprising, leaving carryout at 120 mbu. While trade believes this number is too high, it is a pipeline minimum and unlikely to decline. Even with elevated production the stocks to use on soybeans changes little next year with an initial carryout estimate of 140 mbu. Early estimates indicate the United States will see a 49 mbu increase in domestic use next year from this one, but a 205 mbu decrease in exports as competition from Brazil in the global market increases.

The initial 2021/22 global carryout numbers were also released. The USDA is predicting a world corn carryout of 283.5 million metric tons (mmt) this year and an increase to 292.3 mmt next year. The global soybean ending stocks are now predicted at 86.5 mmt this year and 91.1 mmt at the end of the 2021/22 marketing year. The world wheat supply is forecast to hold nearly steady from 294.7 mmt this year to 295 mmt next year.

One of the biggest changes being noted was to the average cash price forecast. On corn the USDA is predicting $4.35 for this year and $5.70 next year. The average soybean value is $11.25 this year and $13.85 next year. The wheat average is now at $5.05 for the current year and $6.50 for new crop.

The Brazilian firm CONAB also updated its production figures, trimming both corn and soybean estimates from April. CONAB is now projecting a soybean crop of 135.4 mmt, just under last month’s 135.5 mmt. The corn crop is now projected at 106.4 mmt, down from April’s 109 mmt estimate. While down, these are still both record levels of production. The most interest is on corn as analysts believe that number could drop as low as 90 mmt given ongoing drought conditions.

Commodity values continue to be influenced by the outside markets, mainly the global economy. Even with some countries again posting COVID restrictions, the global economy is improving, and thoughts are it will continue to do so into 2023. This has elevated commodity demand as world travel is increasing and consumers are getting back to more normal routines. There are indications that the world economy may become unstable in the future though as interest rates are likely to increase to cover COVID spending.

Now that this data has been released, trade will revert to monitoring actual crop conditions and weather outlooks. For crop condition, the most worry is on the slow emergence we are seeing, as even though planting is well ahead of normal, crop development is barely holding to an average pace. On the weather side trade will closely monitor the drought that is affecting the U.S. Plains as it appears this may shift east into the heart of the Corn Belt.

We continue to hear debate over this year’s projected plantings in the United States and why the total of corn and soybean acres was so much lower than expectations. The immediate response is that the USDA was too low in its figures, but we are now seeing a different opinion. Last year farmers were encouraged to plant as many acres as possible to receive subsidy payments to compensate for the loss of trade from the US/Chinese trade war. We are not seeing that scenario this year which is likely reducing a desire to plant as many acres, especially those that do not yield well.

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