The Agriculture Department left most of its crop production and usage estimates unchanged in its latest World Agricultural Supply and Demand Estimates released Friday, matching trader expectations ahead of the report.
The corn outlook did call for lower exports and increased ending stocks 75 million bushels, while soybean supply and use were unchanged for the month.
Jason Roose, a commodity analyst for U.S. Commodities in West Des Moines, Iowa, said December reports historically have few surprises, and this followed the same trend. “I’d say a majority of these numbers were dialed in,” ahead of the report, which also limited large price swings before the release as well.
USDA projected corn exports higher for Ukraine but lowered corn export estimates for the United States, Russia and the EU. The report lowed corn exports by 75 million bushels as the agency noted competition from exporters and relatively high U.S. prices have resulted in slow sales and shipments through early December. With no other use changes, USDA raised corn ending stocks 75 million bushels.
Next month’s January report will provide another opportunity to gauge the ongoing impact of the stronger U.S. dollar and its impact on American corn exports, Roose said.
The season-average corn price was lowered 10 cents to $6.70 per bushel based on observed prices to date. Roose said the Environmental Protection Agency’s recent Renewable Fuels Standard blending mandates requirements “really hurt the optimism for any increase in ethanol demand” which he believes also hurts the long-term interests and upside potential in some of the new crop prices. EPA kept the RFS levels for conventional corn ethanol in 2023 at 15 billion gallons — the same number set in previous rollouts — before increasing to 15.25 billion gallons for both 2024 and 2025.
Soybean supply and use projections for the 2022/23 marketing years are unchanged from last month.
“Based on a review of EPA's recent proposed rule for renewable fuel obligation targets, soybean oil used for biofuel for 2022/23 is reduced 200 million pounds to 11.6 billion,” the report said. “Soybean oil exports are also reduced on historically low export sales through November. With reduced use of soybean oil for biofuel and exports, food use and ending stocks are raised.”
The U.S. season-average soybean price forecast is unchanged at $14.00 per bushel. The soybean oil price is reduced by 1 cent per pound to 68 cents. The soybean meal price forecast increased $10.00 to $410.00 per short ton.
This month’s domestic 2022/23 U.S. wheat supply and use outlook were unchanged from last month. On the world supply side, USDA reported that global wheat supplies are projected lower; consumption stocks were also lowered while the report projected increased trade.
The WASDE report lowered Argentina's wheat production estimates 3 million tons to 12.5 million with reductions in both harvested area and yield due to continued widespread dry conditions. If realized, this would be the lowest production since 2015/16, USDA said. Canada’s production is reduced 1.2 million tons to 33.8 million, based on the latest Statistics Canada estimate, the third largest crop on record.
The WASDE lowered global wheat consumption by 1.6 million tons to 789.5 million, mainly on lower feed and residual use by the EU and Ukraine. World trade is raised 2.2 million tons to 210.9 million on higher exports by Australia, Ukraine, the EU and Russia more than offsetting reduced exports by Argentina.
In January, Roose said analysts will be watching the ongoing weather situation in Argentina, where drought conditions are lowering production.
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