The US Department of Agriculture’s (USDA) September crop production report surprised analysts. In August, the USDA recorded the 2022 U.S. Soybean production and projected higher-than-expected corn acres.
However, a lot can happen in one month, with average temperatures lasting more than 30 days and little to no rainfall across the corn belt, ultimately leading to a significant reversal of harvest expectations.
The USDA forecast a soybean yield of 50.5 bushels per acre in his September 12 crop production report. This is down 2.7% from last month’s all-time high of 51.9 bushels per acre and down 1.8% from 2021’s 51.4 bushels per acre. Soybean production was estimated at 4.378 billion bushels, down 3.4% from the all-time high of 4.531 billion bushels forecast in August and down 1.3% from 4.435 billion bushels a year earlier. The September estimate not only fell well short of his average trading forecast of 4.496 billion bushels, which produced a yield of 51.5 bushels per acre, but also fell outside the expected range of the trading forecast.
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Bryan Harris, executive director and owner of Global Risk Management, said: “People weren’t in the right position for a cut like this and the market was surprised.”
Chicago soybean futures surged after the midday report was released, as did soybean meal and soybean oil futures. But Harris said he felt the rise might be too steep given the season’s timeframe. “I don’t know if the prices we’ve achieved are sustainable for the next harvest and they’re probably higher than they need to be,” Harris said, adding that he expects soybean prices to settle over the next few weeks and around be $14.25 a bushel.
The day after the report was released, soybean futures began to ease. However, the Sept. 1, 2023 carryover of soybeans will cause the USDA to forecast 200 million bushels in its Sept. 12 WASDE (World Agricultural Supply and Demand Estimates) report, compared to 200 million bushels reported in Aug. 2 245 million bushels, 2022 was 240 million bushels per year. “Certainly, the 200 million bushel closing stock is very tight and every bushel has to be tracked,” said Harris.
Analysts feel there is some headroom in the latest soybean export estimates. In his WASDE on Sept. 12, the USDA said he forecast soybean exports from 2022 to 2023 at 2.085 billion bushels, while in August he forecast 2.155 billion bushels. But export demand is under pressure, especially from his ongoing COVID-19 lockdown in China, the world’s largest soybean importer, and from 2022 to South America’s competition with Brazil, where he expects a bumper crop in 2023. is receiving
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Steve Fried, vice president of research at ADM Investor Services said, “The USDA’s Office of Foreign Agriculture announced that it was suspending weekly export sales updates until September 15th due to unexpected difficulties in rolling out the new reporting system”.
The analyst was also surprised by the WASDE soybean crush forecast for Sept. 12. The USDA has lowered its projected 2022-23 inflows to 2.225 billion bushels from August’s 2.245 billion bushels.
“The 20 million bushel fracturing volume reduction was surprising because we expect record fracturing margins in the first half of next year,” Harris said. “Given the money the devastating community is making, it’s clear they have no incentive to slow down.”
Corn estimates had expected lower numbers, but the reduction in hectares that could actually be planted and harvested was staggering, analysts said. The planting report reduced the number of acres it plans to plant corn in 2022 by 4% to 89.49 million acres.
In august 12 According to the Crop Production Report, the USDA increased the number of acres planted with corn to 89.821 million acres, making an estimated 81.84 million acres ready for harvest. However, those numbers were lower than the March 31 forecast, with 88.608 million acres of corn and 80.844 million acres of grain expected to be harvested by 2021, according to the September 12 crop production report. The planted area for the year was 93,357,000 acres and the yield was 85,388,000 acres.
USDA’s 2022 corn production forecast of 13.944 billion bushels was 3% below its August forecast of 14.359 billion bushels and 8% below its 2021 production forecast of 15.115 billion bushels. The quote as of today was within the expected range of the transaction. Corn carryover forecast for Sept. 1, 2023 is 1.219 billion bushels, down 12% from August’s 1.388 billion bushels.
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Source: USDA
