USDA Finally Satisfies on Cotton Numbers in August WASDE ReportFri, 12 Aug 2022 14:44:04 CDT
The August 12 monthly USDA report holds changes to crop demand, adjustments to new crop production, and new crop demand. This report is unique as it starts with a more intensive yield measurement estimate than May through July. The August report is derived from a nationwide farmer survey conducted July 25 – August 8 for general estimates as of August 1. This month's report included reports from 15,400 producers of all crops.
USDA released the World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports that lowered crop acreage, yield, and overall production for corn and soybeans.
Farm director KC Sheperd had the opportunity to visit with Rich Nelson at Allendale, who said that traders were looking to see how USDA handled the Corn, Soybean, and cotton yield discussions after so many problems in the Western Plains, "On corn, USDA did likely lower the yield numbers from 177. Last month and that was 175.4. So stocks dropping is now under 1.4 billion, and many traders still suggest a few more yield declines in the weeks ahead."
Nelson said the Star of the report this time was Cotton, "USDA did recognize both problems of harvested acres as well as yields and certainly brought the stock numbers down to quite low levels here with limit up trade here posted for futures." Nelson said there have been discussions about both lower acres and lower harvested acres as well as discussions of lower yields at the same time, "USDA did give the bulls what they wantd to see right now. In fact, with this decline in harvested almost 1.4 million acres, they're sitting with 8% harvest, so they're going to plant 12.5 But only harvest 7.1. This is a discussion of a 57% harvested rate; very, very low. So USDA finally recognized the acreage argument in this report." Nelson says they also hit the yield side a little bit here, "Dropping in this case 846 million bushels, that's the lowest yield in two years. So USDA satisfied some of the bull arguments for Cotton today."
Nelson said Soybean numbers were a bit of a stickler, "USDA raised yields now over trend to 51.9 bushels an acre, on top of that their stocks numbers now 245 billion bushels. These would imply it's a little tough to hold this $14 plus price if the trade believed it." Nelson said many traders suggest a slight weakness in the soybean yield numbers in the weeks ahead.
For Wheat, there were some minor changes in production. Nelson said, "USDA to add a little bit to the spring wheat total, but brought the all wheat number only 2 million bushels higher than last month. The biggest price for us on the week was actually raising the increase in wheat export sales this morning. Despite the fact that we're still troubled enough to ctually hit their prior estimate here."
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USDA adjusted demand for several uses of wheat. Food demand was adjusted upward by 6 mb, while exports were increased 25 mb. The two changes accounted for most of the drop in ending stocks to 610 mb. The national average farm gate price dropped by $1.25 to $9.25 per bushel.
Globally, USDA's ending stocks only dropped by 0.2 mmt to 267.34 mmt, but there were a few changes in stocks and production estimates. Beginning stocks declined by 3.75 mmt, but production climbed by 8 mmt. USDA attributed the gain to higher production in Russia, Australia and China. USDA bumped Russian production to 88 mmt from its prior 81.5 mmt estimate.
WHEAT CROP PRODUCTION
All-wheat production was forecast at 1.78 bb, up less than 1% from July and up 8% from 2021. Wheat yield was pegged at 47.5 bushels per acre, up 0.2 bpa from July, and up 3.2 bushels from a year ago. Harvested acres are pegged at 37.5 million acres, down less than 1% from July's forecast.
Winter wheat production is forecast at 1.2 billion bushels, down less than 1% from July, but up 6% from 2021. The winter wheat yield is pegged at 47.9 bushels an acre, down 0.1 bpa from July and down 2.3 bpa from last year's yield. Harvested acres for grain or seed are pegged at 25 million acres, down 2% from last year.
Other spring wheat production for grain is forecast at 512 mb, up 55% from a year ago. Yield is pegged at 47.8 bpa, up 0.8 bpa from July, and up 16.1 bpa from a year ago. Acreage is pegged at 10.7 million acres, up 5% from 2021.
Hard red winter wheat is pegged at 576 mb; soft red winter is forecast at 381 mb; white winter is projected at 240 mb. Durum wheat is forecast at 73.6 mb, down 5% from July, but up 97% from 2021.
USDA on Friday shaved corn production 146 million bushels to 14.35 billion bushels, but increased soybean production 25 million bushels to 4.53 billion bushels, which went against the pre-report estimates on soybeans.
On yield, USDA lowered corn yields 1.6 bushels to 175.4 bushels per acre (bpa). For soybeans, yield was bumped up 0.4 bushel to 51.9 bpa.
Estimated harvest acreage came in at 81.8 million acres, down just 100,000 acres from earlier forecasts. USDA bumped down the yield estimates 1.6 bushels to 175.4 bushels an acre. That put production at 14.359 billion bushels (bb), down 146 million bushels (mb) from July's forecast.
In making up for lower production, USDA increases the old-crop carryover 20 mb as well with beginning stocks pegged at 1.53 bb.
On the demand side, USDA put 2022-23 Feed and Residual use at 5.325 bb, down 25 mb from July. Feed, Seed and Industrial use overall came in 5 mb higher at 6.825 bb. Ethanol usage held pat at 5.375 bb.
Total domestic usage came in at 12.15 bb, down 20 mb from July.
Exports are pegged at 2.375 bb, down 25 mb from July.
That put ending stocks at 1.388 bb, down 82 mb from July.
The average farmgate price held pat at $6.65 per bushel.
Globally, USDA lowered beginning stocks 0.44 million metric tons (mmt) to 311.84 mmt. Global production was lowered 6.29 mmt to 1,179.61 mmt. Global exports were bumped up 3.05 mmt. That put ending stocks at 306.68 mmt, down 6.26 mmt.
USDA increased Russian corn production 0.5 mmt while lowering the European Union's production 8 mmt to 60 mmt.
On Ukraine, USDA bumped up production 5 mmt to 30 mmt and increased export 3.5 mmt to 12 mmt.
USDA also held pat on its forecast for Brazil's 2021-22 production at 116 mmt. Argentina's production was held at 53 mmt as well.
USDA bumped up its forecast for soybean production to 51.9 bushels per acre while also lowering harvested acreage by 300,000. Production increased slightly as well, to 4.53 bb. The soybean yield is higher than pre-report expectations, while production is toward the top of the range of traders' estimates.
USDA increased its forecast for 2022-23 ending stocks to 245 mb, a 15 mb increase. On the demand side, USDA increased its export forecast by 20 mb to 2.155 bb. The national average farm gate price declined by a nickel to $14.35 per bushel.
On old-crop, 2021-22 stocks, USDA increased ending stocks by 10 mb to 225 mb due to lower exports.
Globally, USDA put ending stocks for 2022-23 at 101.4 mmt, above the range of trade expectations. It's up nearly 2 mmt from last month and reflects higher beginning stocks (old-crop stocks) and production in the U.S. and China. USDA raised China's production by just shy of 1 mmt and said it's based on provincial reports.
Ending stocks for 2021-22 declined to 89.73, in line with trade expectations.
Cattle: The forecast for 2022 red meat and poultry production is slightly higher from last month, as stronger beef and broiler forecasts offset the lower trend in pork and turkey. Beef production grew by 68 million pounds from a month ago, pushing 2022's total production to an estimated 27,990 million pounds as slaughter speeds have continued to run aggressively. Beef production for 2023 grew substantially from last month's report, as an additional 325 million pounds were added, which puts the year's estimated production at 26,265 million pounds. Both the third and fourth quarters of 2022 saw increases from July's WASDE report as third-quarter steer prices are expected to average $140 (up $1) and fourth-quarter prices are expected to average $147 (up $2). The first quarter of 2023 saw a $1 increase, as steers are expected to average $151, but the second quarter held steady for 2023 steer prices at $152. 2022 beef imports were reduced by 56 million pounds, while beef exports grew by 65 million pounds. 2023 beef imports saw no changes from July's report, but 2023's estimated exports grew by 40 million pounds.
Hogs: 2022's pork production fell by 81 million pounds as pork production was lowered on the third quarter, as market-ready hogs are in extremely short supply. With market-ready hogs being in short supply, quarterly price projections for both the third and fourth quarters of 2022 were raised from July's report. Hog prices in the third quarter are expected to average $85 (up $9) and fourth-quarter prices are expected to average $69 (up $3). No changes were made to the price projections in 2023. Pork imports for 2022 fell slightly from July's report to 1,547 million pounds, which is 6 million pounds less than a month ago. Pork exports for 2022 were reduced slightly to 6,574 million pounds, down just 2 million pounds from a month ago. Both pork imports and exports for 2023 were unchanged from a month.
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