Market Movers: USDA Report Day

Historically, USDA’s October monthly supply/demand report has been a market mover. USDA incorporates the finalized old crop stock numbers into the balance sheets on this report. They also offer updated corn and soybean production numbers. In recent years though, the trade feels US supply is now known on the September report. For new crop corn and soybeans updated yield were determined by both a farmer survey with 7,500 participants as well as objective in-field analysis. For wheat production, finalized 2024 views from the recent Small Grains Summary are incorporated.

Corn 2023/24: Old crop ended on August 31. Finalized old crop stocks were released on the September 30 Grain Stocks report. That report lowered old crop stocks by 52 million bushels, now 1.760 billion. USDA’s updated demand breakdown today, how they feel that lowered stock was found, showed a 39 million bushel increase in the prior feed/residual view. Old crop corn for ethanol was upped by 6 million. This was already known on the October 1 monthly corn for ethanol numbers were August data was released. Old crop export views were upped by 2 million on this report. The export number is of interest to us as this year’s discrepancy between weekly Foreign Agriculture Service shipments, and WASDE completed exports, soars to 155 million bushels. That is the second largest discrepancy ever. In the prior year it was 108. FAS does not collect data on all US exports. There is always a discrepancy. The question is the size of it.

2024/25: USDA’s new crop balance sheet starts with 52 million bushels in lowered beginning stocks. Their updated yield view was raised by 0.2 bushels to now 183.8. The trade expected 183.4 (ALDL 183.6). Production was raised by a light 17 million bushels to 15.203 billion. That was just over the 15.155 trade guess (ALDL 15.186). In the trade’s view, US production is now known. They next real change will be shown on the January Annual Production Summary. On today’s updated new crop demand view both ends of domestic usage were left unchanged, feed/residual and corn for ethanol. Some would argue we are already ahead of USDA’s view on corn for ethanol. They see a decline of -0.4% this year. Five weeks of ethanol production in this new year have run +2.7% vs. last year. USDA has been confident with their export views this year. That was shown by another 25 million bushel increase today to now 2.325 billion for the year. This would require the remainder of the year to run +11% vs. the five year average pace. It is not that out of line. The US still has a small price advantage vs. Brazil and the recent four weeks have seen sales +21% vs. average. These changes helped USDA lower their ending stock view from 2.057 billion to 1.999. The trade expectation was 1.962 (ALDL 2.002). This is the third month in a row of trimmed new crop stocks. DAILY MARKET OUTLOOK INCLUDES PRICING

USDA raised old crop world corn stocks from 309.6 million tonnes to 312.65. No changes were made to the completed old crop harvest for South America. USDA’s new crop world stock estimate was lowered from 308.4 to 306.5. Beyond the US changes there were no adjustments for South American 2025 harvest expectations. Ukraine’s crop was lowered by 1 to now 26.2. USDA has been actively lowering their Chinese import estimates. On the September report it was lowered by 2 million tonnes. Here in October it was lowered by another 2 million, now 19.0. Of note, the Chinese government’s view is still much lower, 13.0.

Soybeans 2023/24: On September 30 the Grain Stocks report released finalized old crop ending stocks. They were found to be 2 million higher than the prior estimate, now 342. We already knew the old crop crush estimate lightly missed the prior mark. The October 1 monthly crush report detailed August usage. The year ended -8 million from the prior estimate. The year ended +3.4% vs. the prior 2022/23 season. Old crop exports missed the prior estimate by 5 million to now 1.695 billion. The discrepancy between the final Foreign Agricultural Service shipment view and WASDE exports came to 60 million bushels, next to the prior year’s 62. Minor adjustments in other areas were noted.

2024/25: The new crop balance sheet started with a 2 million bushel increase to beginning stocks. On this report a light -0.1 revision was noted for US yields, now 53.1. The trade estimate was 53.1 (ALDL 53.2). Production was lowered a slight 2 million bushels, now 4.582. The estimate was 4.579 (ALDL 4.586). The supply story is still hefty. It is still a record, over any prior year. It is also a full 492 million over last year’s total supply. That leaves demand as the remaining variable. USDA still has a hefty hope for US domestic crush. Left unchanged on this report, they still expect a record level and full 6% increase over last year. The size of that increase is in question. The last month of the old crop year, August, saw a surprising -1% year/year crush rate. ADM has idled the second largest crush plant in the US for six weeks ahead. The trade feels we may be a little behind USDA’s hope but does not feel it is time to start lowering hopes. USDA left their export estimate unchanged on this report. Their 1.850 billion view would be -5% from the five year average. Year to date sales are behind at -22% vs. average. The remainder of the year needs to run +10% vs. average through next August. The US still holds a price advantage vs. Brazil right now. They “hope” to see light improvement in sales in the weeks ahead and perhaps to meet USDA’s view. Of note, the Mississippi River is set to return back to barge restrictions on Sunday. The forecast for current -2.8 feet stage height levels at Memphis to fall to -8.4. This is returning near the lowest September reading, at one point -10.3. For now, USDA’s crush and export hopes would be considered “lightly in doubt”. New crop ending stocks were left unchanged from the prior month’s 550 million. The trade estimate was 549 (ALDL 553). DAILY MARKET OUTLOOK INCLUDES PRICING
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Hopes for price support from a La Nina story impacting Argentina have set back. Drew Lerner notes NOAA estimates of the ENSO reading differ than others. That leaves a light secondary hope from lowered US interest rates. World old crop ending stocks were not changed, 112.4 million tonnes. No changes were noted for completed 2024 South American harvests. Remember, this is much over the 100.9 from the long completed 2022/23 crop year. New crop stocks are set for an additional increase. Today’s report showed a slight change from the prior 134.6 mt view, now 134.7. USDA did not change their prior Brazil or Argentina 2025 production estimates. There were no changes for Chinese crush nor imports. Of note, USDA sees a 109 mt Chinese import this year. The Chinese government is much lower at 94.6. World stocks/use would remain at a record, 33.4%.

Wheat 2024/25: Much of the US wheat story is known. A light -6 million adjustment was noted for long completed old crop stocks. The September 30 Grain Stocks report made a minor revision to the May 31 stock estimate. New crop production was adjusted to the September 30 Small Grains Summary report, -11 million to 1.971. Total supply, beginning stocks/production/imports, will still be the largest in four years. It is 271 million over last year. On this report a minor increase was noted for feed/residual, +10 million. No change was noted for exports. We “should” meet USDA’s goal with ease. They see exports -2% vs. the five year average. Year to date sales are +1%. The remainder of the year through May can run -1%. We could see a boost to US exports in future months if this concern over 2025 world production does play out. USDA will not show any 2025/26 numbers until next May. Ending stocks were lowered by 16 million this report, now 812 million. The trade estimate was 819 (ALDL 808).

World crop wheat ending stocks for this current year were raised by 0.5 million tonnes, now 257.7. There were no changes made for the two crops in active development, Argentina and Australia. USDA’s 32.0 million view for Australia is at odds with the private trade’s 27 – 31 views. USDA also lowered their Russian crop estimate by 1 million to now 82. The Russian government is now at 83. SovEcon lowered their view to 81.5 today. Ukraine’s crop was also trimmed by -0.4 mt. Let’s not forget the world wheat situation is far different than the larger supplied US story. World wheat stocks/use, 32.1%, would be the tightest in 10 years. Now, on top of that please consider the Northern Hemisphere countries that are planting for the summer 2025 harvest. Three of the four are planting in dry conditions. Though winter wheat yields are determined with spring rains, not planting conditions, there is risk of clear tightening next year.