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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

USDA-WASDE FORECAST #604 September 11th 2020

09/11/2020

OVERVIEW

The September 11th 2020 USDA WASDE Report was updated from the August edition reflecting drought conditions and the August 10th derecho with consequences to corn and soybean harvests. September projections are based on updated estimates of harvest area and yield. The corn acreage to be harvested is currently estimated at 83.5 million acres, down 0.5 million acres from the August 12th WASDE report. Soybeans will be harvested from 83.0 million acres, unchanged from the August WASDE report.

 

The September 2020 WASDE estimate of corn yield was lowered 1.6 percent to 178.5 bushels per acre, (168.0 bushels per acre in 2019). The projection of soybean yield was lowered 2.6 percent to 51.9 bushels per acre. (47.4 bushels per acre in 2019)

 

The September USDA projection for the ending stock of corn was decreased by 9.2 percent to 2,503 million bushels. Due to decreased supply the ending stock for soybeans was reduced by 24.6 percent to 460 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with increased compliance with the Phase-One trade agreement with China. The September WASDE projected the corn price at $3.50 per bushel and soybeans at 925 cents per bushel.

It is presumed that projections are based on the assumption that China will as far as possible honor commitments that were disrupted during the first quarter of 2020 by COVID-19. China booked substantial orders for corn and soybeans delivered through August for the 2019-2020 market year in addition to large quantities booked from September onwards for the 2020-2021 market year. Reports on export volumes of commodities to China will be included in upcoming editions of CHICK-NEWS and in subsequent mailings as data becomes available.

 

CORN

The corn harvest for 2020 documented in the September 2020 WASDE Report #604 is projected at 14,900 million bushels consistent with actual planting data and crop progress. The projected 2020 harvest can be compared to 2019 at 13,692 million bushels and is 1.6 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was reduced by 1.7 percent to 5,825 million bushels. The “Ethanol and Byproducts” category was only lowered to 5,100 million bushels despite reduced domestic demand for E-10 due to COVID-19 restrictions and competitive export markets. Corn exports were raised 4.5 percent (100 million bushels) in the face of intense competition from Brazil and Argentine and high world domestic coarse grain production relative to demand. Ending stocks were decreased by 253 million bushels (9.2 percent) to 2,503 million bushels.

 

The forecast USDA farm price for corn was raised by 40 cents to 350 cents per bushel. Near close of trading on September 11th after release of the WASDE the CME quotations for September and December corn were 366 cents and 369 cents per bushel up 16.2 percent and 12.8 percent respectively from quotations on August 12th.

 

SEPTEMBER 2020 WASDE #604 PROJECTIONS FOR THE 2020 CORN HARVEST:

Harvest Area

83.5 m acres

(92.0 m. acres planted, harvest corresponding to 90.7% of acres harvested)

Yield

178.5 bushels per acre

(was 181.8 bushels per acre in August WASDE.)

Beginning Stocks

2,253 m. bushels

Production

14,900 m. bushels

Imports

25 m. bushels

Total Supply

17,178 m. bushels

Proportion of Supply

Feed & Residual

5,825 m. bushels

33.9%

Food & Seed

1,425 m bushels

 8.3%

Ethanol & Byproducts

5,100 m. bushels

29.7%

Domestic Use

12,350 m. bushels

71.9%

Exports

2,325 m. bushels

13.5%

Ending Stocks

2,503 m. bushels

14.6%

Stock-to-domestic use proportion

20.2%

(Was 21.9 % in the August 2020 WASDE Report)

1 metric ton = 39.368 bushels

Average Farm Price: $3.50 per bushel. (Up 40 cents per bushel from the August 2020 WASDE Report)

 

SOYBEANS and SOYBEAN MEAL

USDA projected the 2020 soybean crop to attain 4,313 million bushels, down 2.5 percent from the August value. The 2020 harvest is based on a yield of 51.9 bushels per acre. Use parameters were not changed from the August 2020 WASDE Report with crushings at 2,180 million tons. Projected exports were held at 2,125 million bushels, based on orders from China during the fourth quarter of 2020 in accordance with the Phase-One Trade Agreement. In early September prices increased in response to bookings for the 2020-2021market year. Prior to 2018 our largest trading partner imported the equivalent of 25 percent of U.S. soybeans. Ending stocks were adjusted downward from 610 million bushels in August to 460 million bushels in the September WASDE.

 

The USDA projection of the ex-farm price for soybeans for the 2020 harvest is 925 cents per bushel, up a noteworthy 90 cents per bushel from the August 2020 WASDE estimate. Near close of trading on September 11th and following release of the WASDE, the CME quotations for soybeans for September and November 2020 delivery were 1,025 cents and 997 cents per bushel up 15.4 percent and 12.7 percent respectively compared to the values on August 12th.

 

Projected supply of soybean meal was held at 52.2 million tons. Domestic use was unchanged at 38.3 million tons. Exports were unchanged at 13.5 million tons. The USDA increased the ex plant price of soybean meal to $315 per ton. Near close of trading on September 11th CME quotations for September and December 2020 deliveries of soybean meal were $317 and $325, higher by 12.0 and 12.1 percent respectively compared to the August 12th quotations.

 

SEPTEMBER 2020 WASDE #604 PROJECTION FOR THE 2020 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:-

Harvest Area

83.0 m acres

(83.8 m. acres planted, harvest corresponding to 99.1% of planted acreage)

Yield

51.9 bushels per acre

(Was 53.3 bushels per acre in the Aug. WASDE)

Beginning Stocks

575 m. bushels

(Was 615 m. bushels in Aug. 2019 WASDE)

Production

4,313 m. bushels

Imports

15 m. bushels

Total Supply

4,903 m. bushels

Proportion of Supply

Crushings

2,180 m. bushels

44.5%

Exports

2,125 m. bushels

43.3%

Seed

100 m. bushels

 2.0%

Residual

38 m. bushels

0.8%

Total Use

4,442 m. bushels

90.6%

Ending Stocks

460 m. bushels

9.4%

(Was 610 m. bushels in the August WASDE)

1 metric ton = 76.34 bushels

Average Farm Price: 925 cents per bushel (Up 90 cents per bushel from August WASDE Report)

 

SEPTEMBER 2020 PROJECTION OF SOYABEAN MEAL PRODUCTION AND USE

Beginning Stocks

0.400 m. tons

Production

51.400m. tons

Imports

0.400 m. tons

Total Supply

52.200 m. tons

Domestic Use

38.300 m. tons

Exports

13.500 m. tons

Total Use

51.800 m. tons

Ending Stocks

0.400 m. tons

Average Price ex plant:$315 (Up $25 per ton from the August 2020 WASDE Report)

 

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest low to stable production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic yield, use and exports.

 

  • For each 10 cents per bushel change in corn:-
  • The cost of egg production would change by 0.45 cent per dozen
  • The cost of broiler production would change by 0.25 cent per live pound
  • For each $10 per ton change in the cost of soybean meal:-
  • The cost of egg production would change by 0.40 cent per dozen
  • The cost of broiler production would change by 0.25 cent per live pound.

 

WORLD SITUATION

With respect to world coarse grains and oilseeds the August WASDE included the following appraisals:-

 

“This month’s 2020/21 foreign coarse grain outlook is for larger production, with fractionally higher trade and lower stocks relative to last month. EU corn production is lowered, mostly reflecting a reduction for Romania. Ukraine corn production is down, as acute short-term drought across much of the primary growing areas lowered corn yield prospects after a favorable start to the summer growing season. Corn production is raised for Brazil, as high domestic prices are expected to support an expansion in area. Corn production is also increased for India and Nigeria. Barley production is raised for Russia, the EU, and Australia”.

 

“Major global coarse grain trade changes for 2020/21 include barley export increases for Russia and Australia. Corn exports are raised for the United States, Brazil, and Mexico. Corn imports are raised for Venezuela. China’s corn feed and residual use for 2019/20 and 2020/21 is raised from last month, based on observed soybean meal equivalent protein consumption and current corn prices. Foreign corn ending stocks are lower relative to last month, as increases for India and Nigeria are more than offset by a decline for China”.

 

“The 2020/21 foreign oilseed supply and demand forecasts include higher production, exports, and ending stocks. Higher foreign production of soybeans, cottonseed, peanuts, and rapeseed is partly offset by lower sunflower seed. Soybean production is raised for Brazil, Canada, and India, and lowered for Ukraine. Brazil’s 2020/21soybean crop is raised 2 million tons to 133 million, mainly on increased area as producers face stronger prices and competitive exchange rates ahead of planting. Brazil’s production for 2013/14 to 2018/19 also reflects revisions by Brazil’s National Supply Company (CONAB). Soybean production forecasts for Canada and India are raised on recent government data and planting progress reports. Ukraine’s soybean production is lowered due to low rainfall throughout August”.

 

“Global soybean exports are raised 0.9 million tons to 166.3 million, with higher exports for Brazil and lower exports for Ukraine based on available supplies. Crush is reduced for Argentina in line with the prior year’s reduction. Global ending stocks are reduced 1.8 million tons to 93.6 million as lower U.S. stocks are partly offset by higher foreign stocks, particularly for Argentina and Brazil”.

 

Updated World production and use of total grains and oilseeds is summarized for the 2019/2020 season taking into account Northern and Southern Hemisphere production:-

 

Factor: billon m. tons

Coarse Grains

Oil Seeds

Output

1.460

609

Supply

1.798

721

World Trade

224

190

Use

1.460

515

Ending Stocks

337

107

(1 metric ton corn= 40 bushels) (“ton” represents 2,000 pounds)


 
Copyright © 2020 Simon M. Shane