June WASDE shows slight changes to corn, soybeans

The World Agricultural Supply and Demand Estimates recently released by the United States Department of Agriculture showed only slight changes to the balance sheet for corn, soybeans and wheat. But the estimates left in place a lot of uncertainty about the effects of the ongoing war in Ukraine.

The WASDE said the outlook for 2022-23 U.S. wheat this month was for increased supplies, unchanged domestic use and exports, and higher stocks. Supply estimates were raised on higher production, with all wheat production projected at 1,737 million bushels—up 8 million bushels from the May report. The National Agricultural Statistics Service raised winter wheat production to 1,182 million bushels as increases for soft red winter and white winter more than offset a reduction for Hard Red Winter.

In his regular series of webinars on the WASDE reports, Jim Mintert, director of the Center for Commercial Agriculture at Purdue University, said that given the wheat situation, it might be a good idea for some soybean farmers to consider double-cropping soybeans and wheat, especially those who have done so in the past.

The WASDE forecast larger beginning stocks, slightly higher use, and increased ending stocks for 2022-23 corn. Corn area and yield forecasts were unchanged.

The USDA will release its acreage report on June 30, which will provide survey-based indications of planted and harvested areas.

Corn profits, uncertainty

The WASDE forecast a slight decline in U.S. corn exports, “but that seems unlikely, given the Ukraine situation,” said Mintert. Foreign corn ending stocks were raised relative to last month, mostly on increases for Ukraine and Russia. But Mintert said ending stocks of corn for the major exporters are tighter that they appear, especially if Ukraine’s stocks are completely excluded, which the WASDE does not do. While negotiations have been undertaken to persuade Russia to allow seaborne exports of both Ukrainian and Russian corn and other grains out of the Black Sea, it’s far from clear if that will happen. In May, U.S. Secretary of State Antony Blinken accused Russia of using food as a weapon in Ukraine by holding grain supplies “hostage.” Major global trade changes for 2022-23, according to the WASDE, include larger corn imports for the EU, but reductions for Morocco, Jordan and Peru.

Mintert said corn margins continue to be good; ethanol margins are also good despite high corn prices, even though ethanol facilities are competing with exporters for feedstock. For ethanol, a lot will depend on whether and how consumers change their summer driving habits as the price of gasoline continues to skyrocket, he said. Mintert displayed a “heat map” created by Rabobank showing distributions of corn prices, with higher prices nearer river terminals.

Nathan Thompson, associate professor of agricultural economics at Purdue University, said the “Ukraine corn bump” at the beginning of Russia’s invasion didn’t last long, but corn basis has shown greater than usual variability as uncertainty continues. He said fuel prices could affect decisions about whether it was worthwhile to haul corn to river terminals. According to a basis tool Thompson developed, there is a 25% chance of corn ending below $6 a bushel by the Dec. 22 expiration date, and a 25% chance of it going above $8 a bushel.

Corn is showing “record” profits, despite higher inputs, said Mintert, but added that when prices fall, input costs will be much slower to fall.

He said it might be a good idea for those renting farmland on a cash basis to start thinking about conversations about bonus payments to their landlords, to avoid being outbid and losing production acres.

Argentina, Brazil soybean acres to expand

This month’s U.S. soybean supply and use projections for 2022-23 included lower beginning and ending stocks and higher prices. Lower beginning stocks reflects increased exports for 2021-22. Soybean exports for 2021-22 were raised 30 million bushels to 2.17 billion, reflecting strong export sales and a reduced export forecast for Brazil. With reduced supplies for 2022-23 and no use changes, soybean ending stocks were projected at 280 million bushels, down by 30 million.

About 78% of the U.S. soybean crop had been planted by June 5, with the average being 79%. Major exporter ending stocks were estimated at 16%, with Argentina’s and Brazil’s harvested acres expected to rise by 5 million acres by 2023. If this happens, it would be one of the larges year-to-year increases in soy acreage ever.

Similar to corn, the soybean basis in the area surveyed by the Purdue team (9 counties in central Indiana) show what Thompson called a “tug of war” between processors and exporters. Thompson said it was a good time for soybean growers to think about pricing at least some of this year’s stocks.

Mintert said his team had surveyed farmers in the area about double-cropping with what, and 28% said they were considering it. The team only surveyed farmers who had previously rotated corn and wheat. Mintert noted that since the farm bills of the 1990s, corn belt wheat acreages have been reduced, but that may change.

David Murray can be reached at [email protected].

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