Grain markets have been volatile this year with changing acreage and crop weather prospects affecting domestic crop supply prospects, and Black Sea geopolitical conflicts dominating international grain markets, said Kansas State University Agricultural Economist Dan O’Brien, in an outlook study.
CORN MARKETS
The July 12 USDA WASDE report framed the market’s perception that the US corn supply/demand balance sheet for new crop 2023/24 as being insulated from extremely tight stocks.
With 2023 US corn planted acreage projected to be 94.096 million acres, up 2.13 million from June WASDE estimates, harvested acres at 86.322 million, up 2.23 million from June and projected corn yield of a record-high 177.5 bushels per acre, the USDA projected a 2023 crop of a record high 15.320 billion bushels.
Given crop usage of 14.485 billion bushels, 2023/24 ending stocks were projected at 2.262 billion bushels, with an ending stocks-to-use ratio of 15.62% (both seven-year highs). In the July 12 WASDE scenario, the USDA predicted US corn prices to fall to $4.80 a bushel, down from $6.00 and $6.60 the last two years.
But, with weather challenges and yield uncertainty facing the 2023 US corn crop, yields may decline to 173-175 bushels per acre, with 2023 production in the 14.950-15.150-billion-bushel range, causing ending stocks to be in the 1.875-2.050-billion-bushel range.
Even with those substantial production declines, US corn ending stocks-to-use remain in the 13%-14% range – with KSU projections of US prices rising moderately to $5.00-$5.50 a bushel.
SOYBEAN MARKETS
Conversely, sharp declines of 4 million US planted and harvested acres in the June 30 USDA Acreage report caused the soybean market supply-demand balance sheet to be vulnerable to extremely tight stocks in new crop 2023/24.
With 2023 planted acreage projected to be down to 83.505 million acres, harvested acres at 82.696 million and projected soybean yields of a record-high 52.0 bushels per acre, the USDA projected a 2023 soybean crop of 4.300 billion bushels.
Given total soybean crop usage of 4.276 billion bushels, soybean ending stocks were projected at 300 million bushels for 2023/24, with ending stocks-to-use of 7.02%.
In the July WASDE, the USDA predicted US soybean prices to fall to $12.40 a bushel in marketing year 2023/24, down from $13.30 and $14.20 the last two years.
With weather challenges and yield uncertainty also facing the 2023 soybean crop, it is likely that US soybean yields may decline at least to a range of 49.0-50.5 bushels per acre, with 2023 production falling to 4.050-4.175 billion bushels, as ending stocks settle in the 140-260-million-bushel range, being associated with soybean ending stocks-to-use dropping to the 3%-6% range.
If that occurs, soybean average prices for new crop likely would climb to the $13.50-$16.00-per bushel-range, or more.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $181.05 per cwt to $181.16, compared with last week’s range of $179.20 to $190.48 per cwt. FOB dressed steers, and heifers went for $285.95 per cwt to $289.54, compared with $284.31 to $292.45.
The USDA choice cutout Monday was down $0.22 per cwt at $301.78 while select was up $0.19 at $277.73. The choice/select spread narrowed to $24.05 from $24.46 with 70 loads of fabricated product and 17 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were steady to down $0.05 at $1.85 to $2.05 a bushel over the Sep corn contract, which settled at $5.04 a bushel, down $0.17.
The CME Feeder Cattle Index for the seven days ended Friday was $243.86 per cwt, up $0.99. This compares with Monday’s Sep contract settlement of $249.20 per cwt, up $0.22.