Today’s S&D update from USDA showed higher corn and lower soybean stocks than anticipated, although wheat numbers were more aligned with expectations. Predictably, soybean futures are seeing a bullish session as a result, while the corn market is showing uncertainty with a slightly bearish bent.

We knew from the Sep. 30 stocks report that 2021/22 ending stocks were lower for corn than reported in the September WASDE (-148 million bushels from that estimate) and higher for soybeans (+34 million bushels). Those differences were expected to be carried forward to 2022/23 stocks, showing just minor changes due to S&D adjustments.

However, USDA lowered forecast 2022/23 corn consumption and soybean production more than expected, leading to today’s modest surprises for their respective 2022/23 ending stocks. For corn, use this season for exports was lowered 125 million bushels, to 2.15 billion, to reflect the lower level of commitments we’re seeing. The 50 million bushel increase to 2022/23 feed use was offset by a 50 million decline in use for ethanol. These use categories are harder to gauge, and USDA may be waiting to make more serious adjustments. As of this report, USDA is projecting a 53 million bushel YOY decline in corn use for ethanol, which could come to pass given better ethanol yields and little increase in motor fuel consumption. Corn for feed use at 5.275 billion bushels feels low when compared to recent years, but there are a number of factors (inflation, lower supply of livestock) that could limit demand. We will probably see increases at least in the feed category in future reports.

USDA dropped soybean yield to 49.8 bushels per acre, down from 50.5 bpa estimated in September, due to challenging weather in a number of growing regions during August. As a result, 2022/23 soybean production fell 65 million bushels from the September projection, a sharper decline than expected. USDA was able to offset this loss in supply with higher carry-in and lower exports, keeping estimated ending stocks at 200 million bushels.

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