USDA shocks market with a cut to projected corn production in WASDE report

WHEAT: The outlook for 2022/23 U.S. wheat is for reduced supplies, exports, domestic use stocks, and higher prices. U.S. 2022/23 wheat supplies are projected down 3 percent, as lower beginning stocks more than offset a larger harvest. All wheat production for 2022/23 is projected at 1,729 million bushels, up 83 million from last year, as higher yields more than offset a slight decrease in harvested area. The all wheat yield, projected at 46.6 bushels per acre, is up 2.3 bushels from last year. The first survey-based forecast for 2022/23 winter wheat production is down 8 percent from last year as lower Hard Red Winter and Soft Red Winter production more than offset an increase in White Wheat production. Abandonment for Winter Wheat is the highest since 2002 with the highest levels in Texas and Oklahoma. Spring Wheat production for 2022/23 is projected to rebound significantly from last year’s drought-reduced Hard Red Spring and Durum crops primarily on return-to-trend yields. Total 2022/23 domestic use is projected down 1 percent on lower feed and residual use more than offsetting higher food use. Exports are projected at 775 million bushels, down from revised 2021/22 exports and would be the lowest since 1971/72. Projected 2022/23 ending stocks are 6 percent lower than last year at 619 million bushels, the lowest level in nine years. The projected 2022/23 season-average farm price (SAFP) is a record $10.75 per bushel, up $3.05 from last year’s revised SAFP. Wheat cash and futures prices are expected to remain sharply elevated through the first part of the marketing year when the largest proportion of U.S. wheat is marketed. The global wheat outlook for 2022/23 is for lower supplies and consumption, increased trade, and lower ending stocks. Global production is forecast at 774.8 million tons, 4.5 million lower than in 2021/22. Reduced production in Ukraine, Australia, and Morocco is only partly offset by increases in Canada, Russia, and the United States. Production in Ukraine is forecast at 21.5 million tons in 2022/23, 11.5 million lower than 2021/22 due to the ongoing war. Canada’s production is forecast to rebound to 33.0 million tons in 2022/23, up significantly from last year’s drought-affected crop. Projected 2022/23 world use is slightly lower at 787.5 million tons, as increases for food use are more than offset by declining feed and residual use. The largest feed and residual use reductions are in China, the European Union, and Australia as well as a sizeable decline in food use in India. Projected 2022/23 global trade is a record 204.9 million tons, up 5.0 million from last year. Imports are projected to rise on increased exportable supplies from Russia and Canada more than offsetting reductions for Ukraine and Australia. Russia is projected as the leading 2022/23 wheat exporter at 39.0 million tons, followed by the European Union, Australia, Canada, and the United States. Ukraine’s 2022/23 export forecast is 10.0 million tons, down sharply from last year on reduced production and significant logistical constraints for exports. India is expected to remain a significant wheat exporter in 2022/23. Projected 2022/23 world ending stocks are reduced 5 percent to 267.0 million tons and would be the lowest level in six years. The largest change is for India, where stocks are forecast to decline to 16.4 million tons, a five-year low.

COARSE GRAINS: The 2022/23 U.S. corn outlook is for lower production, domestic use, exports, ending stocks, and higher prices. The corn crop is projected at 14.5 billion bushels, down 4.3 percent from last year. The corn yield is projected at 177.0 bushels per acre, 4.0 bushels below the weather adjusted trend presented at USDA’s Agricultural Outlook Forum in February. The very slow start to this year’s planting in the major corn producing States and the likelihood that progress by mid-May will remain well behind normal reduce yield prospects. Despite beginning stocks that are up relative to a year ago, total corn supplies are forecast to decline 2.7 percent to 15.9 billion bushels. Total U.S. corn use in 2022/23 is forecast to fall 2.5 percent on declines in domestic use and exports. Food, seed, and industrial (FSI) use is virtually unchanged at 6.8 billion bushels. Corn used for ethanol is unchanged relative to a year ago on expectations of flat U.S. motor gasoline consumption. Sorghum FSI is unchanged but higher than the minimum seen in recent years as China is expected to continue to source sorghum from other exporters in addition to the United States. Corn feed and residual use is down 4.9 percent relative to a year ago, reflecting a smaller crop, higher expected season-average farm prices received by producers, and a decline in grain consuming animal units. U.S. corn exports are forecast to decline 4.0 percent in 2022/23 as lower supplies and robust domestic demand limit prospects. Even with record exports projected for Argentina and Brazil, a 550-million-bushel drop in exports for Ukraine due to the ongoing conflict is the primary catalyst for a decline in world trade. With expectations of robust global demand in the face of high prices, the U.S. share of global corn trade is up slightly relative to a year ago. With total U.S. corn supply falling more than use, 2022/23 U.S. ending stocks are down 80 million bushels from last year. Stocks relative to use at 9.3 percent would be below a year ago and lower than the 14.4 percent average seen during 2015/16 to 2019/20. The season-average corn price received by producers is projected at $6.75 per bushel, up 85 cents from a year ago and if realized the highest since $6.89 reached during 2012/13. The global coarse grain outlook for 2022/23 is for lower production and use, and smaller ending stocks. World corn production is forecast to decline from last year’s record high, mostly reflecting reductions for Ukraine, the United States, the EU, and China that are partially offset by increases for Brazil, Argentina, Serbia, and South Africa. World corn use is expected to decline 1.2 percent, with foreign consumption down 0.9 percent. World corn imports are projected to fall 2.3 percent, with the largest year-over-year declines for China, Canada, the EU, Brazil, and the United Kingdom. Notable increases in corn imports include Vietnam, Iran, and Bangladesh. Global corn ending stocks are down 1.4 percent to 305.1 million tons, mostly reflecting expected declines for China and the United States that are partially offset by increases for Brazil, Serbia, and Ukraine. For China, total coarse grain imports for 2022/23 are forecast at 37.9 million tons, down 5.0 million from a year ago and below the record 50.5 million reached during 2020/21. China’s internal market prices for energy feedstuffs remain higher than the world market, despite a surge in prices among major exporting countries. Corn imports are expected to decline 5.0 million tons to 18.0 million with a decline in imports from Ukraine. Barley imports are projected at 10.0 million tons and sorghum at 9.5 million.

RICE: The 2022/23 outlook for U.S. rice is for reduced supplies, exports, domestic use, and ending stocks. Total 2022/23 supplies are projected at 258.2 million cwt, down 4 percent from a year earlier on lower production and beginning stocks more than offsetting record imports. All rice production is projected at 182.7 million cwt, down 5 percent from 2021/22 on reduced harvested area and yield. The projected all rice yield is 7,596 pounds per acre, down 113 pounds from last year’s record with a reduction in relatively higher-yielding California acreage, as indicated in the NASS Prospective Plantings report. Projected all rice imports are 38.0 million cwt, up from the revised 34.5 million for 2021/22. Continued strong demand for Asian aromatic varieties and reduced domestic supplies are factors behind the increase. Domestic and residual use for 2022/23 is projected lower at 143.0 million cwt on reduced supplies. Exports are projected at 82.0 million cwt, down from the revised 85.0 million for 2021/22 with U.S. rice increasingly uncompetitive due to higher prices. All rice 2022/23 ending stocks are projected at 33.2 million cwt, down 11 percent from last year. The 2022/23 all rice season-average farm price (SAFP) is projected at a record $17.80 per cwt, up $2.10 from the 2021/22 revised SAFP. The increase for 2022/23 is primarily the result of a record long grain SAFP and a record California medium- and short-grain SAFP. The global rice outlook for 2022/23 is for record production, consumption, and trade but with reduced ending stocks. Production is projected at a record 514.6 million tons, up slightly from the 2021/22 record with greater output expected from China, India, and Bangladesh, the three largest global rice producers. World rice consumption is projected at a record 518.4 million tons, up nearly 8.0 million from 2021/22 with most of the increase coming from India and China. Global trade is projected at 54.2 million tons, up 1.5 million from 2021/22 as higher exports are expected from several of the major Asia exporters, with India again projected as the leading global exporter and Thailand remaining a distant second. Projected 2022/23 world ending stocks are 186.3 million tons, down 3.8 million from the 2021/22 record, mostly on a reduction for China. OILSEEDS: The 2022/23 outlook for U.S. soybeans is for higher supplies, crush, exports, and ending stocks compared with 2021/22. The soybean crop is projected at 4.64 billion bushels, up 5 percent from last year’s crop mainly on higher harvested area. With slightly lower beginning stocks, soybean supplies are projected at 4.89 billion bushels, up 4 percent from 2021/22. Total U.S. oilseed production for 2022/23 is projected at 136.6 million tons, up 6.1 million from 2021/22 mainly on higher soybean production. Production forecasts are also higher for canola and sunflowerseed. The U.S. soybean crush for 2022/23 is projected at 2.26 billion bushels, up 40 million from the 2021/22 forecast. Domestic soybean meal disappearance is forecast to increase 2 percent from 2021/22 with low soybean meal prices relative to corn. U.S. soybean meal exports are forecast at 14.4 million short tons, leaving the U.S share of global trade near the prior 5-year average. With increased supplies, U.S. soybean exports are forecast at 2.2 billion bushels, up 60 million from the revised 2021/22 projection. Despite reduced soybean supplies available for export from South America for the first half of the 2022/23 marketing year, an anticipated record harvest and sharply higher exports beginning in early 2023 is expected to leave the U.S. with a lower share of global trade in 2022/23. U.S. ending stocks for 2022/23 are projected at 310 million bushels, up 75 million from the revised 2021/22 forecast. The 2022/23 U.S. season-average soybean price is forecast at $14.40 per bushel compared with $13.25 per bushel in 2021/22. Soybean meal prices are forecast down $20 per short ton from 2021/22 to $400 per short ton and soybean oil prices are forecast down 5 cents to average 70 cents per pound, as oilseed and product supplies rebound in foreign markets. Global oilseed production for 2022/23 is projected at 647.1 million tons, rising 50.3 million from last marketing year when droughts impacted South American soybean production and the Canadian canola crop. Global soybean production is forecast up 45.3 million tons to 394.7 million, with Brazil accounting for over half of the increase, up 24 million tons to a record 149 million. Argentina’s soybean crop is expected to reach 51 million tons and Paraguay 10 million. Partly offsetting higher global soybean and canola production is lower oilseed production for Ukraine. Global protein meal consumption is expected to grow 3 percent in 2022/23, recovering from slow growth in the past two marketing years. Nearly half of the gains are in China where soybean crush is forecast to increase 6 million tons from 2021/22 to 95 million. Exportable supplies of oilseed meals and oils are expected to recover, with higher 2022/23 crush for Canada and South America, which offset declines in sunflower products out of Ukraine. Further, palm oil exports are expected to increase for Indonesia after slower-than-normal shipments and export restrictions in the prior marketing year. Global 2022/23 soybean exports are expected to increase 9 percent to 170.0 million tons after last year’s drought-related declines in South America. China accounts for about half of the trade growth, with 2022/23 imports rising 7 million tons to 99 million. Global soybean ending stocks are projected at 99.6 million tons, up 14.4 million, with most of the increase in Brazil, Argentina, and the United States. Other notable soybean changes include back year revisions to China’s domestic consumption growth to better reflect per capita consumption and population growth. Soybean imports for China in 2021/22 are raised 1 million tons to 92 million. Global 2021/22 ending stocks are lowered with lower Chinese stocks, a reduction in Argentina’s soybean production, and lower U.S. stocks.

SUGAR: U.S. sugarbeet production for 2022/23 is projected at 33.652 million tons with yield forecast at 30.23 tons/acre and area harvested projected at 1.113 million acres. Assuming average regional levels of beet pile shrink and slicing recovery, beet sugar production for the August-July crop year is projected at 4.922 million short tons, raw value (STRV). Sugar production from the 2022 crop in the August-September period is projected at 600,000 STRV, a drop of 78,461 from last month due to a very slow pace of plantings this year. The net effect of August-September production projected for both 2022 and 2023 (5-year average of 678,461) is to increase fiscal year 2022/23 production over the crop year to 5.000 million STRV. While beet sugar production for crop year 2021/22 is only marginally changed based on processors’ data, the fiscal year 2021/22 total is reduced to 5.254 million due to the lower anticipated production in 2022 August and September. Cane sugar production for 2022/23 is projected at 4.040 million STRV. Production levels in Florida, Louisiana, and Texas are expected to be close to 2021/22 levels. For 2021/22, Florida cane production is increased by 4,358 STRV to 1.942 million on processors’ reporting. TRQ imports for 2022/23 are projected at 1.379 million STRV with levels set at minimum levels consistent with the WTO and FTA bindings and with TRQ shortfall projected at 99,208. Re-export imports are projected at 250,000 STRV and high-tier tariff imports at 50,000 STRV. Imports from Mexico for 2022/23 are projected at 1.323 million STRV. For 2021/22, TRQ imports are up 159,625 STRV to 1.727 million on the reallocation of the TRQ shortfall. Shortfall for 2021/22 is now estimated at 70,548 STRV. Re-export imports are increased 50,000 STRV to 300,000 on pace to date. Imports from Mexico are up by 170,000 STRV to reflect the recent increase in the “Other Sugar” Export Limit made by the Department of Commerce at the request of USDA. High-tier tariff imports for 2021/22 are increased by 31,833 STRV on recent imports of raw sugar paying the high duty. Deliveries for 2021/22 are increased by 85,000 STRV to 12.450 million on a very strong pace for the first 6 months of the fiscal year, especially by beet processors and direct importers of refined sugar. Deliveries for 2022/23 are at the same levels as estimated for 2021/22. Ending stocks for 2021/22 are estimated at 1.813 million STRV, implying a stocks-to-use ratio of 14.40 percent, up from 12.53 percent last month. Ending stocks for 2022/23 are residually projected at 1.266 million STRV for an ending stocks-to-use ratio of 10.05 percent. Mexico production for 2022/23 is projected at 6.000 million metric tons (MT). Area harvested is projected at 795,000 hectares, yield at 67.76 MT/hectare, and recovery at 11.14 percent. Production of less-than-99.2 pol raw sugar, or “Other Sugar” as defined in the AD/CVD Suspension Agreements, is projected at 792,868 MT. This production level corresponds to the 13.2-percent 5-year average of low pol sugar as a proportion of total sugar production. This sugar is for shipment to the U.S. market and is projected to constitute 70 percent of total exports to the United States, or 1.133 million MT. Deliveries, imports, and ending stocks are expected to be close to 2021/22 levels. Exports are residually projected at 1.628 million MT, with 495,804 going to destinations other than the United States under license.

LIVESTOCK, POULTRY, AND DAIRY: Total U.S. red meat and poultry production for 2023 is forecast below 2022, as lower beef production more than offsets higher pork and poultry production. For 2023, beef production is forecast lower with expected declines in both fed and non-fed cattle supplies. Pork production is forecast higher with increased farrowings and continued growth in productivity. Higher forecast broiler production reflects moderating feed costs and improved productivity. Turkey production is projected higher as the sector recovers from the 2022 Highly Pathogenic Avian Influenza (HPAI) outbreaks. Egg production is likewise forecast higher with postHPAI flock rebuilding. Total red meat and poultry production forecasts for 2022 are raised from last month. Higher beef and broiler production more than offset a reduction in pork and turkey production. Beef production is raised, with more cattle placed in feedlots sooner than normally expected due to drought conditions, supporting higher annual fed cattle slaughter. Additionally, cow slaughter is forecast higher. Pork production is reduced on lighter expected carcass weights. Based on recent slaughter and hatchery data, the broiler production forecast is raised while the turkey production forecast is lowered. Egg production is lowered on reduced expected laying flocks. For 2023, beef exports are down from 2022 on lower beef production and higher prices. Beef imports are lower on tight global supplies. Pork imports are slightly higher compared to 2022 and exports are slightly lower. Broiler exports are forecast higher on increased production and lower prices, and turkey exports are forecast slightly higher on increased supplies and a resumption of pre-HPAI trade patterns. For 2022, beef and broiler exports are raised while pork and turkey exports are lowered based on recent trade data. For 2023, cattle prices are forecast above 2022 on tighter supplies. Hog, broiler, and turkey prices are forecast lower with increased production. The egg price is forecast lower with higher expected production. The 2022 cattle price forecast is raised on recent data and tighter expected fed cattle supplies later in the year. Hog prices are lowered on prices to date and weaker demand, while broiler and turkey prices are raised on stronger prices to date and continued demand strength. Milk production for 2023 is forecast above 2022 driven by gains in milk per cow, with the milk cow herd expected to average close to 2022 levels. Exports on a fat basis are forecast lower, largely on lower expected butter sales. On a skim-solids basis, exports are forecast higher with gains expected in cheese, skim milk powder, and whey sales. Imports are projected to grow on a skim-solids basis with higher imports of a number of dairy products, but are unchanged on a fat basis. The Class III price is forecast lower on weaker cheese and whey prices. The Class IV price is forecast lower as well, with projections lower than 2022 for butter and non-fat dry milk. The 2023 all milk price is forecast at $23.55 per cwt. The 2022 milk production forecast is raised from the previous month, with higher milk cow inventories more than offsetting slower growth in milk per cow. Fat-basis exports are raised from the previous month mainly on stronger butter and cheese shipments. The skim-solids basis export forecast is lowered on weaker skim milk powder and whey exports. Fat basis and skim-solids basis import forecasts are raised from last month on higher expected imports of a number of dairy-containing products. Cheese and butter prices are raised from the previous month on strong demand, but nonfat dry milk and whey prices are lowered. Both Class III and Class IV are lowered. The 2022 all milk price is forecast at $25.75.

COTTON: Despite an expected 1-million-acre year-to-year increase in U.S. area planted to cotton, the U.S. cotton projections for 2022/23 include a smaller crop as abandonment is projected to more than double. Production is forecast at 16.5 million bales, based on 12.2 million planted acres as indicated in the March Prospective Plantings, but harvested area is expected to fall 1.1 million acres to 9.1 million as limited precipitation in the Southwest suggests more abandonment compared with 2021/22’s below-average level. With a higher national yield, production is forecast about 1 million bales lower. With a larger carryin, supplies are projected slightly lower. Exports are also expected to fall slightly, to 14.5 million bales, as the U.S. share of world trade declines. At 2.9 million bales, 2022/23 U.S. ending stocks are projected 500,000 bales lower than the year before, and equivalent to 17 percent of total use. The marketing year average upland farm price is projected at 90 cents per pound, down slightly from the previous year’s record high. For 2021/22, U.S. cotton production is reduced about 100,000 bales from last month to 17.5 million bales. Exports and consumption are unchanged, and ending stocks are estimated 100,000 bales lower, at 3.4 million. The projected season-average price is 1 cent higher than in April, at 92 cents per pound. Global supplies in 2022/23 are projected below a year earlier, as lower beginning stocks more than offset a 2.6-million-bale increase in production, with consumption and ending stocks also lower. Increased area is expected to drive production higher, with a 2-million-bale increase expected in India’s crop, 500,000-bale gains expected in China and Turkey, and smaller increases forecast for Uzbekistan, Pakistan, and Mexico. World consumption in 2022/23 is projected to fall 1 million bales from the year before to 122 million bales, with cotton prices currently the highest since 2011 and the highest ever relative to polyester. World ending stocks are expected to fall 1 percent from the year before, to 82.8 million bales. World trade is expected to rise 2 million bales as China’s imports partly rebound. The global 2021/22 estimates show lower production and use compared with the previous month. India’s crop is reduced 1 million bales as late-season marketings fell, accounting for much of the 1.8- million-bale global decrease. Projected world consumption is down 1.1 million bales from April as China’s forecast is reduced 500,000 bales and historical revisions to Uzbekistan’s balance sheet reduced estimated consumption there 500,000 bales. Ending stocks are slightly lower as well, down 270,000 bales to 83.6 million.

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