The USDA supply and demand report offered some surprises Friday, Jan. 12, as Randy Martinson of Martinson Ag Risk Management and Don Wick of the Red River Farm Network discussed during the Agweek Market Wrap.

The report details changes in

estimated supply and demand

around the world for major commodities.

Examples of changes included:

• A projected 2023/24 U.S. wheat ending stocks lowered by 11 million bushels on decreased supplies. The global wheat outlook for 2023/24 is for larger supplies, consumption, trade, and ending stocks compared with last month.
• This month’s 2023/24 U.S. corn outlook is for greater production, larger food, seed, and industrial use, increased feed and residual use, and higher ending stocks.
• With slightly lower beginning stocks, soybean supplies are up 31 million bushels from last month.

Martinson said most were not expecting USDA to make big changes.
“We saw an increase in yields for both corn and soybeans. That surprised me. But we did see a decrease in harvested acres,” Martinson said. “There was a lot to digest and then there was some surprises.”

Wick brought up the estimated 177.3 bushels per acre average yield for corn and soybeans at 50.6. That showed results were either above or on the high end of trade expectations.

Martinson said that was a surprise after the adverse weather conditions the country saw during the growing season, with drought smacking much of the Midwest.

Wick pointed out that, in recent weeks, a lot of attention has been on South America’s weather. He wondered if the report gave any indication of what the weather has done to their supply and demand.

Martinson said that the report showed Argentina upped their production, but he was surprised that Brazil didn’t make larger cuts, though USDA did make a conservative cut.

“Everybody is waiting to see where the acres are going to fall for the safrinha corn crop before they start making too much an adjustment to the corn crop for Brazil,” Martinson said.

Russia has become a huge player in the wheat market, Wick said. Martinson agreed and, despite two significant military issues taking place, it’s having little impact on the wheat market. Russia dumping huge amounts of grain continues to have its effect on the global market.

Wick said what’s happening in the Red Sea, where Houthi rebels are attacking transporting ships, is having an effect on some outside markets, such as crude. Since November, the rebels have repeatedly targeted ships in the Red Sea, saying they were avenging Israel’s offensive in Gaza against Hamas, according to the Associated Press.

“Now its going to slow down some shipments of crude,” Martinson said. But it should also give a boost to the Pacific Northwest port, where they are not experiencing these transportation disruptions.

Cold weather has moved across the northern Plains, where temperatures have plummeted below zero for the first time this winter. But this more northern region has avoided much of the snowfall that’s plagued states such as Nebraska and Iowa. Wick said these are major livestock regions that are facing significant slowdowns due to weather.

“It’s been a tough go for these guys because of not one but at least two major winter storms,” Wick said. Martinson agreed and added that this cold weather is dipping down as far as Oklahoma.

“The rumor is now that packers are likely going to start up with their Saturday kills to try to move forward and kind of unplug the surplus, or delays that we’re seeing,” Martinson said.

Weather is causing a backup to cattle and hogs getting to market, Wick said.

Martinson looks ahead to hopefully see the grains see increases. At prices as low as they are, Martison said he believes the U.S. should see an increase in exports or at least be attractive to those export markets.

The upcoming three-day weekend, with Martin Luther King Jr. Day on Monday, Jan. 15, may allow markets some extra time to digest the big changes that came up from the latest report. Martinson is hopeful the cold temperatures could lead to a recover for corn and wheat prices as the potential of winterkill starts to rear its head.

(The Agweek Market Wrap is sponsored by Gateway Building Systems.)

Michael Johnson is the news editor for Agweek. He lives in rural Deer Creek, Minn., where he is starting to homestead with his two children and wife.
You can reach Michael at mjohnson@agweek.com or 218-640-2312.