By Karl Setzer

 The USDA left the U.S. corn yield projection unchanged this month at 177 bushels per acre but increased total output to 14.5 billion bu (bbu) on higher acres from the June revisions report. Corn carryout for the 2021/22 crop year increased to 1.51 bbu, a 25 million bu (mbu) bump from June on reduced feed and residual usage. This carried over into the 2022/23 balance sheets, and when combined with a larger crop, is expected to give us a 1.47 bbu carryout. These volumes were all above the average trade guesses.

The U.S. soybean yield was left unchanged this month at 51.5 bushels per acre, but crop size was reduced to 4.5 bbu from last month’s 4.64 bbu due to the 2.6-million-acre reduction from the June revisions. On ending stocks, we did see a slight increase to the 2021/22 balance sheets of 10 mbu, putting it at 215 mbu, just over what trade was expecting. New crop ending stocks were reduced a large 50 mbu to 230 mbu, but this was 20 mbu over the average trade guess. The USDA reduced its new crop crush forecast by 10 mbu and exports by 65 mbu due to tight supplies.

The U.S. total wheat production figure was raised to 1.78 bbu this month from last month’s 1.737 bbu. This was the result of elevated winter wheat acres and higher than expected yields. Ending stocks on old crop wheat increased a minimal 5 mbu for a 660 mbu total. New crop wheat carryout is now estimated at 639 mbu, up 12 mbu from June.

On the global side of the balance sheets, all figures for the 2021/22 marketing year increased slightly from last month. This put world ending stocks on corn at 312.3 million metric tons (mmt), soybeans at 88.7 mmt, and wheat at 208.1 mmt. For the 2022/23 marketing year, our ending stocks are projected at 312.9 mmt on corn, 99.6 mmt on soybeans, and 267.5 on wheat. The most notable of these numbers was the global wheat reduction from this year to next. The USDA stated drought is reducing the size of the wheat crop in the European Union and lowered Ukraine output another 10 percent due to lower acreage.

The USDA also updated its beef and pork balance sheets. Beef production for 2022 is now estimated at 27.92 billion pounds and pork production at 27.16 billion pounds, both nearly steady from the June release. For 2023, the USDA is predicting beef production of 25.94 billion pounds and pork at 27.52 billion pounds. The pork number is a 150-million-pound increase from last month. Average values for 2023 are now at $153.25 per hundredweight on steers and $69.75 per hundredweight on hogs.

Prior to this data, the Brazilian soybean processing group Abiove released its soybean export forecast for the country. Abiove predicts Brazilian soybean exports of 76.8 mmt for 2022, down 9.3 percent from 2021. This is from the smaller crop as Abiove has the Brazilian soybean crop at 125.8 mmt, -9.4 percent from last year. The Current Abiove crop projection is up 300,000 metric tons from its previous estimate, however. Abiove is also predicting soy meal exports of 18.5 million tons versus 17.2 million tons in 2021.

Several traders and analysts have already incorporated the USDA acreage and stocks data into their balance sheets. It is no surprise that many of these new formulas are coming up with tighter stocks to use than the USDA is currently using in their outlook. Private analysts are taking the revised acreage numbers and quarterly stocks figures and combining them with weather forecasts, historical yields, and demand projections to come up with new stocks to use ratios. While all of these tighten, the most notable is on soybeans, where a historical minimal ending stocks figure is possible.

One of the biggest factors in current price discovery at the present time is Managed Money flow, same as it has been for the past several months. The difference now is that this money is flowing out of the commodity market and applying pressure. The removal of these traders is mainly the result of ongoing inflation and economic worries and how they have changed the landscape of all markets. This comes even with supportive fundamental factors and even in the soy complex where U.S. balance sheets are forecast to be very tight. The best chance of reversing the attitude of these traders would be a weather threat for the United States.

Another factor behind the recent selling in commodities is the shift in the technical outlook. Nearly all technical indicators have turned negative in the past week, showing that is the path of least resistance at the present time. Not only has this encouraged fresh selling, but it has also diminished any buying interest as well. Some of this technical weakness is also seasonal, primarily in corn. Technical traders have also looked for years with similar trends are basing current activity off those moves.

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