USDA’s first look at the 2023/24 marketing year ushered the bulls back into the wheat complex in this morning’s report. Expectations for record-setting corn and soybean crops kept bearish pressure alive in the markets following the report’s release. Wheat prices bucked the growing supply trend, however, as new crop stocks shrunk from current marketing year levels both at home and globally – triggering a bullish price run in the process.

“Rains across the Heartland may have slowed rapid planting paces over the past couple days, but with nearly half of the anticipated corn crop and over a third of the soybean crop already in the ground as of last Sunday, markets are more optimistic than ever that this year will yield a more bountiful crop than the same time last year,” according to Farm Futures grain market analyst Jacqueline Holland.

USDA left acreage estimates unchanged from the March 31 report – another acreage survey isn’t expected to be conducted until next month, Holland also points out.

And despite the trade hoping that USDA would deviate from its trendline yield forecasts, USDA maintained its econometric projections for 2023 yields which if realized would produce the largest U.S. corn and soybean crops on record. After several years of turbulent growing conditions and unprecedented (and compounded) market upheaval, today’s data was a clear sign that more liquidity would soon be added back into the corn and soybean supply pipeline this year – if Mother Nature cooperates.

Corn

USDA is expecting to see record-breaking corn production of 15.3 billion bushels for the 2023 season. That would be a year-over-year increase of more than 10%, if realized. USDA also offered a bullish yield estimate of 181.5 bushels per acre – well above the average trade guess of 180.7 bpa.

“With beginning stocks up slightly, total corn supplies are forecast at 16.7 billion bushels, the highest since 2017/18,” USDA also notes.

Corn use in 2023/24 is expected to increase 5% year-over-year, which USDA attributes to higher domestic use and exports. Food, seed and industrial use could rise 55 million bushels to 6.7 billion bushels. Corn used for ethanol could increase 1%. And 2023/24 exports are forecast to rise 325 million bushels to 2.1 billion. Unfortunately, that’s due to lower prices that will make U.S. grain more competitive on the world market. The season-average farm price is expected to trend $1.80 lower from 2022/23, falling to $4.80 per bushel.

In South America, USDA expects Argentine corn production during the 2022/23 season to hold steady at 1.457 billion bushels while increasing Brazilian production estimates to 5.118 billion bushels.

World ending stocks for 2023/24 are projected at 12.319 billion bushels. That’s modestly above the average trade guess of 12.105 billion bushels.

Soybeans

USDA’s initial outlook for 2023/24 calls for higher soybean supplies, crush and ending stocks, with exports trending lower from the prior year’s pace. Production is expected to reach 4.51 billion bushels, which would be 5% above 2022 totals, if realized. “With lower beginning stocks partly offsetting increased production, soybean supplies are forecast at 4.75 billion bushels, up 4 percent from 2022/23,” USDA adds.

Soybean exports are expected to trend 40 million bushels below 2022/23 levels to 1.98 billion bushels. USDA attributes the change to increased competition from South America. Ending stocks in 2023/24 are projected at 335 million bushels, which is up 120 million from 2022/23.

As with corn, USDA expects to see lower season-average prices for soybeans. The agency estimates that will be $12.10 per bushel, which is $2.10 lower from year-ago levels. Soymeal prices are expected to decline $90 per short ton to $365. Soyoil prices are expected to slide 6 cents per pound lower, to 58 cents.

In South America, USDA made no changes to its 2022/23 soybean production estimates in Argentina, which remains at 992 million bushels. The agency did increase its Brazilian production estimates to 5.695 billion bushels, however.

“Curiously, USDA left Argentina’s corn and soybean harvests unchanged while raising both harvests for Brazil,” Holland notes. “Argentina’s soybean imports were also unchanged despite market chatter of more Brazilian soy cargoes being shipped via Paraguay into Argentina. I think the lack of revisions on Argentine’s grain flows may be a conservative data forecasting approach by USDA, but the steep increase to Brazilian crops suggests that Argentina’s soymeal export volumes (as well as corn and soybeans) could continue to dwindle amid scarce supplies. Soymeal prices edged up following the report’s release, indicating that the market thinks this may be a bigger issue than the current dataset would lead us to believe.”

There was also a narrow miss for a possible South American soymeal shakeup, Holland adds.

“Argentina has long held the title of the world’s top soymeal exporter,” she says. “USDA attaché reports published earlier this spring suggested that Brazil would upset Argentina for that title in today’s report, however that was not the case.”

Global ending stocks for 2023/24 came in well above the average trade guess of 3.970 billion bushels after USDA offered an initial projection of 4.501 billion bushels.

Wheat

USDA’s 2023/24 outlook for wheat includes “reduced supplies and exports, increased domestic use, and smaller stocks compared with 2022/23.” All-wheat production could rise slightly higher to 1.659 billion bushels due to an increase in harvested area, although average yields may decline 1.8 bushels per acre from last year, to 44.7 bpa.

Domestic use in 2023/24 is expected to reach 1.112 billion bushels, a yearly increase of 1%. Exports could fade 50 million bushels lower, to 725 million bushels. Ending stocks could erode 11% lower year-over-year and reach the lowest level in 16 years.

USDA doesn’t expect an encore for record-breaking prices this season. The agency’s 2023/24 season-average farm price projection is down 85 cents a bushel to $8.00.