The corn side of domestic balance sheets in the January World Agricultural Supply and Demand Estimates contained some surprises for trade. The main one was a 2.4 bushel per acre increase to the U.S. corn yield, putting the final yield estimate at 177.3 bpa. This gave the U.S. a corn crop of 15.342 billion bushels for the 2023/24 marketing year, 107 million bushels more than the last estimate and 110 mbu more than trade was expecting. Corn demand increased 75 mbu in the January update to put ending stocks at 2.162 bbu, 30 mbu more than the December estimate and 60 mbu more than trade anticipated. This is a 14.8 percent stocks to use ratio and led to an average cash price per bushel forecast of $4.80 for the marketing year.

The USDA also surprisingly increased the soybean production data in the January supply and demand report. The final yield update for the marketing year was bumped up 0.7 bushel to put the national average at 50.6 bpa. This gave the United States a soybean crop of 4.165 bbu, an increase of 35 mbu from the last estimate. The soybean crop was also 30 mbu more than expected by trade. The only change to soybean demand was a 3 mbu reduction in residual usage. This put the U.S. ending stocks at 280 mbu, 35 mbu above the December figure and 37 mbu more than trade expected. The stocks to use ratio on soybeans is now 6.7 percent, which is where rationing becomes less of a concern. The average cash price per bushel estimate on soybeans is now $12.75 a bushel.

Alterations to the wheat balance sheets were less severe. The final U.S. wheat production estimate came in at 1.812 bbu, steady from the December projection. The only change to wheat demand was a 1 mbu reduction to seed usage. Ending stocks for wheat now stand at 648 mbu, which was 10 mbu less than expected and 11 mbu under the previous projection as old crop wheat production was trimmed 12 mbu this month. 

The global side of the report also contained some surprising data for the market. The USDA left the Argentine corn crop projection unchanged at 55 million metric tons but trimmed the Brazilian crop by 2 mmt, putting it at 127 mmt. The Argentine was as expected but the Brazilian crop was 2 mmt more than the average guess. The real surprise to world corn production was an 11.8 mmt increase to the Chinese crop, putting it at 288.84 mmt.

The most interest in the entire report was on the Brazilian soybean crop as several private analysts have reduced production from adverse weather. The USDA put the Brazilian soybean crop at 157 mmt, down 4 mmt from the last estimate, but 700,000 mt more than trade expected. The USDA also increased the Argentine crop to 50 mmt, up 2 mmt from the prior report and 1.1 mmt more than expected. The combined South American soybeans crop is nearly 25 mmt more than last year and is a negative factor for the global oilseed market.

Global ending stocks estimated offered trade little help. The world corn ending stocks for the end of the 2023/24 marketing year are now projected at 325.22 mmt. This is 10 mmt more than the December estimate and was 12.2 mmt above the average trade guess. The world soybean carryout is now projected at 114.6 mmt, 390,000 more than the last estimate but a large 3 mmt more than expected. Global wheat carryout is forecast at 260.3 mmt, 2 mmt more than last month and 2 mmt more than expected.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is collected from a variety of sources and is believed to be reliable but is not guaranteed to be accurate. This report is provided for informational purposes only and is not furnished for the purpose of, nor is it intended to be relied upon for specific trading in commodities herein named.