Several changes were made to corn balance sheets in the January update, starting with production. The USDA lowered the 2022/23 corn crop by 200 million bu (mbu) to a total of 13.73 billion bu (bbu). This was the result of 1.6-million-acre reduction to harvested acres, which was partially offset by a 1-bushel-per-acre increase in yield. We did see corn demand trimmed by 25 mbu on feed and 150 mbu on exports, putting carryout at 1.24 bbu, a 15 mbu decease from last month. On the global side corn carryout was projected at 296.4 million metric tons (mmt), 2 mmt fewer than last month.

Soybean balance sheets were also impacted by production as harvested acres were cut by 300,000. Soybean yield was also lowered 7-tenths of a bushel to give us a crop of 4.276 bbu. On the demand side we had reductions to residual use of 4 mbu and exports of 55 mbu. As a result, U.S. soybean carryout was reduced 10 mbu to a 220 mbu total, well below trade guesses. World soybean reserves were projected at 103.5 mmt, an 800,000 metric ton decrease from December.

Very few changes were made to domestic wheat balance sheets this month, but all resulted in higher demand. Seed demand increased 3 mbu and feed usage was raised 30 mbu. This gave the U.S. a carryout estimate of 567 mbu, 4 mbu less than last month. The surprise in the wheat complex came from winter wheat plantings that came in at 37 million acres, above trade guesses and well over the 33.27 million that were seeded last year. The global wheat ending stocks estimate increased 1 mmt to 268.4 mmt from larger crops in Ukraine and the European Union.

The smaller U.S. corn and soybean crops were verified in the Dec. 1st stocks numbers. As of Dec. 1, the U.S. had 10.8 bbu of corn, 3.02 bbu of soybeans, and 1.28 bbu of wheat in inventory, all of which were at the low end or below trade guesses. Last year the United States had inventories of 11.64 bbu on corn, 3.15 bbu of soybeans, and 1.39 bbu of wheat.

Much attention going into this report was on South American production, but the USDA made few changes to crop sizes. Brazilian corn production was lowered 1 mmt to 125 mmt, but the country’s soybean crop estimate increased 1 mmt to 153 mmt. The Argentine corn crop was lowered 3 mmt to total 52 mmt and the soybean crop was lowered 4 mmt to 45.5 mmt.

Beef production for 2023 was estimated at 26.45 billion pounds, an increase of 170 million pounds. Pork production for 2023 increased 140 million pounds to total 27.48 billion pounds. Beef export estimates were unchanged at 3.09 billion pounds and pork exports were bumped up 70 million pounds to 6.35 billion. The average steer values for 2023 is projected at $158.25 per hundredweight and hogs are at $68.00 per hundredweight.

Prior to the release of the USDA data, CONAB released its own projections on the Brazilian crops. CONAB projects this year’s soybean crop at 152.7 mmt, down slightly from last month’s 153.5 mmt. The firm’s corn crop estimate is for 125.1 mmt compared to the 125.8 mmt in December. The smaller crops are the result of dry conditions that impacted central and southern regions of the country. These projections remain well above last year’s Brazilian crops of 125.5 mmt on soybeans and 113.1 mmt for corn.

While mostly overlooked, China also updated its supply and demand figures for corn and soybeans. Chinese officials are projecting a corn crop of 272.5 mmt, an increase of 12 mmt from last year. China lowered its corn import forecast to 22 mmt for this marketing year compared to 29.5 mmt last year. China’s soybean crop is projected at 16.4 mmt this year, a year-to-year decline of 3 mmt. Chinese officials still lowered the country’s soybean import forecast to 91.6 mmt, a yearly decline of 8 mmt.

The United States is becoming more competitive in the global market on grains, but is still seeing lower values out of Ukraine. This spread will continue to narrow as Ukraine runs out of exportable corn, same as what is taking place in Brazil. The U.S. is seeing more competition from Brazil on soybeans though as the price spread between the two sources is widening. Soybean offers out of Brazil are 50 cents per bushel under the U.S. and meal offers are at a $28 per ton discount. Lower freight out of Brazil gives that country a greater edge in the world market.

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