May USDA Reports Has Surprises
The May crop reports provide the first look at the supply/demand balance sheet for the next marketing year. That means this was our first look at expectations for the 2022-2023 that is being planted now.
USDA usually uses trendline yields in this report, but this year, they backed off the trendline yield of 181 bushels/acre for corn, estimating 177 bushels/acre instead, in an acknowledgement of how much the late planting will affect the yield potential of the crop. On the global balance sheet, USDA estimates that Ukraine’s corn crop will be just 19.5 million metric tons, less than half of the 2021 crop. However, they actually cut the US export projections, suggesting the US will not pick up any of Ukraine’s market share. The projected on-farm price was pegged at $6.75. Technically, old crop contracts are looking toppy while the strength moves into the deferred contracts. December set a new contract high on Monday. Support remains at the $7 level.
The soybean report came in near expectations. Using trendline yields, USDA projects a crop of 4.650 billion bushels. Increases in demand are not projected to keep up with the increase in production, resulting in a stocks-to-use ratio of 6.8% for the 22-23 marketing year. The average on-farm price was pegged at $14.40. The crop is progressing well, with 30% of the crop in the ground nation-wide, compared to a 5-year average of 39%. Arkansas farmers are ahead of the average pace of 52% with 57% of the crop in the ground.
USDA’s first rice production estimate for the 22-23 crop was lower than expected, with planted acres pegged at only 2.45 million nation-wide and below trend-line yields of 7,596 lbs/acre thanks to the slow start of the crop and reduction in higher-yielding California acres. Total production is estimated to be only 182.7 million cwt., down 5% from a year ago. Rice imports are expected to set a record at 38 million cwt as domestic supplies are down and demand for aromatics continues to increase. Ending stocks are projected to be down 11% from last year at 33.2 million cwt. The average on-farm price is pegged at $17.80/ cwt. Farmers have made impressive progress in recent weeks as the weather has been more favorable. Arkansas farmers are now 76% planted, compared with a 5-year average of 81%.
The first estimate for the 22/23 U.S. cotton crop was favorable for prices. While planted acres are estimated to be 12.23 million, up from 11.22 million in 21, harvested acres are expected to be down over a million acres, pegged at 9.14 million. Severe drought in Texas is the reason. Ending stocks are pegged at 2.9 million bales, down from 3.4 million for 21/22. The average on-farm price is estimated to be 90 cents/pound.