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Minimal changes to balance sheets reported in June WASDE
By Karl Setzer
As expected, few changes took place to balance sheets in the June WASDE report, especially on corn. The U.S. corn crop was left unchanged at 14.46 billion bu (bbu). Corn exports were lowered by 50 million bu (mbu) and industrial use was raised by 5 mbu for a 45 mbu increase to ending stocks on old crop, putting it at 1.485 bbu. This carried over into new crop with an ending stocks projection of 1.4 bbu. The average cash price projection on corn was left unchanged at $6.75.
U.S. soybean production numbers were also unchanged from May with a crop of 4.64 bbu. The USDA increased its old crop soybean export projection by 30 mbu which dropped ending stocks to 205 mbu. As with corn this also lowered new crop ending stocks an equal amount to total 280 mbu. The average cash projection on soybeans was raised by 30 cents to stand at $14.70.
Few changes were made to the domestic wheat balance sheets as well. Old crop ending stocks were left unchanged at 655 mbu. New crop production was increased by a minimal 8 mbu for a crop of 1.737 bbu. No alterations were made to new crop usage which puts 2022/23 carryout at 627 mbu. The average cash values on new crop wheat were unchanged at $10.75.
Minimal changes were made on the global balance sheets this month. On the 2021/22 balance sheets, numbers were mostly steady with corn at 310.9 million metric tons (mmt), soybeans at 86.2 mmt, and wheat at 279.4 mmt. For 2022/23 we did see an increase in corn ending stocks of 5.4 mmt from May for a 310.5 mmt total. This was the result of a larger crop estimate for Ukraine. New crop soybean ending stocks were mostly steady at 100.5 mmt as was wheat at 266.9 mmt.
The USDA left the Argentine corn crop estimate unchanged at 53 mmt but made a slight increase to soybean production of 1.4 mmt, putting the crop at 43.4 mmt. Brazil corn production was also left unchanged at 116 mmt and the soybean crop was increase 1 mmt for a 126 mmt total.
Beef and pork production figures only saw minimal changes. Beef production for 2022 is now projected at 27.91 billion pounds, up 70 million from May. This year’s pork production is estimated at 27.22 billion pounds, up 270 million. Production for 2023 was left unchanged on both with 25.95 billion pounds of beef and 27.37 billion pounds of pork. We did see slight increases to 2022 meat exports, with beef at 3.4 billion pounds and pork at 6.62 billion pounds. For 2023, exports are projected at 2.94 billion pounds on beef and 6.51 billion pounds for pork.
As this data starts to lose its impact on trade, more interest will be placed on the two major reports that will be released at the end of the month. On June 30th, the USDA will released its quarterly stocks and acreage revisions numbers.
The U.S. acreage estimates have been debated ever since the March intentions report was released, shocking everyone with a smaller corn and larger soybean acreage figure. Since then, nearly all private analysts have stated they believe these numbers were wrong and that corn acres will be higher in the June report. If we do not see verification of these thoughts, it will make any unplanted acreage reports more of a market factor.
The quarterly stocks numbers will be just as important as these will give us a much clearer indication of final ending stocks. While stocks of corn, soybeans and wheat are tight, they will still be adequate for the rest of the year. The question is if these stocks will provide enough of a cushion if we do see some loss in new crop production.
We are starting to see more interest than usual on the Australian wheat crop, given the high demand for that grain in the global market. Australian officials believe the country will harvest a 30 mmt crop of wheat this year. This would be down 6 mmt from last year’s record production, but still the 4th largest wheat crop it has grown. This size of a crop would also be 20 percent above the 10-year average. Given recent weather and elevated plantings in Australia it would not be surprising to see output increase.
The Brazilian firm CONAB has revised its soybean export forecast. CONAB believes Brazil will export 75.2 mmt of soybeans this year, down 1.8 mmt from the previous forecast. The smaller Brazilian soybean crop this year is cutting into the country’s export forecast. Brazil is forecast to crush more soybeans as margins are very favorable. In turn this will elevate Brazil’s meal exports, with CONAB now projecting these at 18.7 million tons compared to their previous estimate of 17.9 million tons.
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