Hard Red Winter Wheat production lowest since 1957Fri, 30 Sep 2022 14:44:27 CDT
Two USDA reports important for grains are released on September 30, quarterly Grain Stocks and the annual Small Grains Summary. This specific Grain Stocks report is important as the September 1 numbers represent final old crop ending stocks. USDA's most recent September 12 report used estimated old crop stock numbers. This report includes production revisions for corn and soybeans for the prior 2021 fall harvest. For wheat, September 1 stocks are what is left over after one-quarter of use. The second report, Small Grains Summary, revises the completed 2022 harvest estimates for wheat, barley, and oats.
Farm Director KC Sheperd caught up with Allendale's Rich Nelson, who says today's 531 million bushel estimate is the lowest since 1957's 429. This year's HRW harvest is -29% from last year. Nelson said the Wheat side is a very interesting story, "They surprised us with a large wheat production revision for this crop we just harvested that going in the bins, 133 million bushel revision for the September report here." Nelson says this is the largest revision for wheat production they've ever done on this report, "They're smaller winter wheat numbers, smaller spring planted crop numbers as well. One small note, though, is their stock numbers were not that small. They were on the trade estimate. So we've got smaller production, but there are some clear signs of some demand issues, which we'll certainly have to talk about with wheat in the next few weeks."
2022/23: A significant 133 million bushel decline was made to USDA’s prior 2022 wheat production estimate today. Now at 1.650 billion bushels, it was under the 1.778 trade expectation (ALDL 1.787). This decline was the largest ever for this report. The prior record was an 84 million bushel decline on the 2015 crop. The production decline was positive but it also highlights another problem when looking at the neutral September 1 Grain Stock count. At 1.776 billion it was right on the trade estimate (ALDL 1.813). To make this stock number work it would imply a June – August feed/residual use of only 110 million bushels. That is less than half last year’s Q1 use of 254. For ending stocks, a 50% demand offset to the production change would lower USDA’s prior 610 million estimate down to 546.
2021 Production: The prior year’s production was raised by 30 million bushels to now 4.465 billion. The trade estimate was 4.437 (ALDL 4.435). USDA has been posting prior year production revisions for soybeans since 2006. Of those there were seven increases averaging 46 million bushels, four decreases averaging 48 million and three making no change. September 1 Old Crop Stocks: 274 million bushels was the final stock number from USDA’s quarterly survey. This was over the 242 trade estimate (ALDL 264). This was a good 34 million bushels over their prior estimate from the September 12 WASDE. This lower old crop stock number flows into the new crop balance sheet. If you assume a 50% offset from demand, as demand changes flow with supply changes, it would raise USDA’s new crop stock estimate from 200 million to 217. That would imply $13.70 for November soybeans. Allendale, with a different demand point, would suggest a 203 million stock and a $13.95 price.
2021 Production: The prior year’s production was lowered by 41 million bushels to now 15.074 billion. The trade estimate was 15.091 (ALDL 15.115). This was only the third time the September Grain Stocks report posted a revised prior year production. The prior two were -71 million last year and +3 million two years ago. September 1 Old Crop Stocks: 1.377 billion bushels was the final stock number from USDA’s quarterly survey. This was under the 1.512 billion trade estimate (ALDL 1.504). This was a good 148 million bushels under their prior estimate from the September 12 WASDE. Beyond the production revision, we would compute June – August feed use at 783 million bushels to make this work. That would be 166 million over last year in the same period. This lower old crop stock number flows into the new crop balance sheet. If you assume a 50% offset from demand, as demand changes flow with supply changes, it would lower USDA’s new crop stock estimate from 1.219 billion to 1.135. That would imply $6.90 for December corn. Allendale, with our view of lower demand vs. USDA separate from today’s report, would suggest a 1.166 billion stock and a $6.85 price
The Hogs and Pigs Report was also released yesterday, and Nelson says that report was pretty positive, "The trade had been expecting a very minor decline in these numbers as far as the total hog herd, and keep in mind we've been in liquidation for two years prior. This is the third year of light liquidation for the hog side, and we have the smallest hog herd in about five years total. So the trade expected a 0.8% production hog herd decline versus last year; USDA gave him a 1.4% decline. Nelson says On top of that, the trade had expected maybe some of the farrow numbers to start evening out, "In other words, stop the general decline. However, USDA gave us a little surprise: a small decline for the SEP-NOV numbers and a small increase for the DEC-FEB fairing numbers. The bottom line is March through May of next year is still going to look at this roughly even with this year's low production, maybe even a slight decline, so we're not in expansion; we're still at five-year hog-herd lows."
Nelson said it's also been a tough week for the cattle market, "They're looking at three issues. First, we have the issues regarding demand concerns which we all understand with this recession talk. We have two confirmed quarters of declines in US economic growth. So we know that's a valid issue. The market really hit that here this week. On top of that number two, we have a little bit larger expected cattle kills recently, about 2-3% over last year; that won't change until we get into November. And the other thing is this; this trade had really been pricing in the belief of a sharp decline in production as we go into q4 or q1. With the six months in a row of minimal change replacements, It looks like that story's not going to be true. So the cattle side has some pressures still for another, just maybe two to three weeks in front of it. Grand scheme of things, we can expect a moderate rebound maybe as we get into November."
SMALL GRAINS SUMMARY
All wheat production came in at 1.65 bb for 2022, up less than 1% from the 2021 total. While acreage declined, overall yield estimates increased by 2.2 bpa to 46.5 bpa.
By class, winter wheat production was 1.1 bb, down 14% from last year; other spring wheat was 482 mb, up 46%; and durum wheat production was 64 mb, up 70% from last year.
Hard red winter wheat production was pegged at 530.9 mb, while soft red wheat was 336.5 bb.
Oat production was estimate at 57.7 mb, 45% higher than 2021, while barley production was estimated at 174 mb.
In 2021, Oklahoma planted 340,000 acres of corn and harvested 295,000 acres of corn. Yield per acre for 2021 was 150 bushels per acre and production at 44.2 million bushels. Corn stocks as of June 1, 2022, are at 4.8 million (off-farms).
Soybeans planted in Oklahoma for 2021 is reported at 580,000 acres planted and 535,000 acres harvested. Yield per acre was 23 bushels per acre and production at 12.3 million bushels.
Sorghum stocks (off farms) as of June 1, 2022, in Oklahoma are reported at 3.2 million bushels.
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