Lower Yields Lead to Tighter Balance Sheets for Corn, Soy
Friday’s USDA reports, one of the biggest data dumps of the year, will be mainly remembered for its cuts to corn and soybean production. Let’s take a look at the various crops.
CORN: USDA estimated the corn crop at 14.867 billion bushels, down from 15.143 billion in November and down from the average analyst estimate of 15.095 billion. A big cut to yield, now seen at 179.3 bushels per acre versus 183.1 in November and the average analyst estimate of 182.7, was partially offset by increased harvested acreage, which was unexpectedly raised to 82.9 million from 82.7 million in November.
The corn carryout was slashed to 1.54 billion bushels, down from 1.738 billion last month and well below the average analyst estimate of 1.675 billion. The cuts to the crop were partially offset by a surprising 25-million-bushel reduction in 2024/25 projected exports and a cut of 50 million bushels to feed and residual use. Dec. 1 corn stocks came in at 12.074 billion bushels, compared to the average analyst estimate of 12.147 billion.
SOYBEANS: The cut to soybean yield was a little less surprising, given that there is more uncertainty about USDA’s fall estimates and because of heat and dryness that hit the crop late in the season, when it was more vulnerable to yield loss than corn. The yield was slashed by a bushel, to 50.7 bushels per acre, down from the average analyst estimate of 51.6. Total production of 4.366 billion bushels was down from 4.461 billion in November and the average analyst estimate of 4.453 billion bushels.
The soybean carryout was slashed to 380 million bushels, down from 470 million last month and the average analyst estimate of 457 million. Dec. 1 soybean stocks of 3.100 billion bushels was down from the average analyst estimate of 3.208 billion.
USDA left its corn and soybean crop estimates for both Brazil and Argentina unchanged from last month, which is not a big surprise, although some analysts were expecting modest reductions to everything except Brazil corn. South American weather and particularly heat and dryness in Argentina will return as a focus next week, with the trade likely more sensitive to crop threats there given the tightening of the balance sheets today.
WHEAT: As expected, the domestic balance sheet for wheat did not see any significant changes, but overall USDA’s data dump on Friday was clearly negative for wheat. USDA pegged the 2024/25 U.S. wheat carryout at 798 million bushels, up 3 million from December on an increase of 5 million bushels in projected U.S. imports and an increase of 2 million bushels in projected seed use reflecting larger winter wheat seedings.
USDA pegged winter wheat seedings at 34.115 million acres, compared with trade estimates that averaged 33.366 million. Hard red winter wheat seedings came in at 24.0 million and soft red plantings were at 6.44 million, in both cases up from expectations. Although clearly negative, USDA’s wheat seedings report was similarly negative a year ago but estimates steadily declined from there.
USDA’s world supply/demand balance sheet was not friendly for the market either as USDA raised its 2024/25 world carryout estimate by 940,000 MT to 258.82 MMT, compared with trade estimates that averaged 257.76 MMT, cutting projected demand marginally, while raising production marginally.
RICE: The rice market received some supportive news from USDA as it cut its 2024/25 U.S. all-rice carryout estimate to 43.5 million hundredweight (cwt.) from the December estimate of 46.7 million, even though it raised estimated production to 222.1 million cwt. from 219.8 million. Domestic and residual use was raised by 6 million cwt. USDA left its season-average price estimate unchanged, though at $15.60. The projected long-grain price was lowered by 20 cents to $14.30, despite the fact that carryout was lowered. USDA raised its long-grain yield estimate to a record high.
