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

USDA-WASDE FORECAST

01/12/2021

USDA-WASDE FORECAST #608 January 12th 2021

 

OVERVIEW

The January 12th 2021 USDA WASDE Report was updated from the December 2020 edition to reflect the 2021 season. There was no change in either corn or soybean harvest areas from the December 10th WASDE report but this may be altered by world prices and weather considerations. The corn acreage to be harvested is currently estimated at 82.5 million acres and soybeans will be harvested from 82.3 million acres.

 

The January 2021 WASDE estimate of corn yield was lowered 3.8 percent to 172.0 bushels per acre, (175.8 bushels per acre in 2020). The estimate of soybean yield was reduced 1.0 percent to 50.2 bushels per acre. (50.7 bushels per acre in 2020)

 

The January 2021 USDA projection for the ending stock of corn was reduced by 8.5 percent to 1,552 million bushels. Due to exports the ending stock for soybeans was reduced by 20.0 percent to 140 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with increased exports to comply with the Phase-One trade agreement with China. The January 2021 WASDE projected the corn price to be $4.20 per bushel and soybeans at 1,115 cents per bushel.

 

It is accepted that projections are based on the assumption that China will not completely honor commitments that were disrupted during the first quarter of 2020 by COVID-19. China booked substantial orders for corn and soybeans to be 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 volumes of commodities exports to China will be included in upcoming editions of CHICK-NEWS and in subsequent mailings as data becomes available.

 

CORN

The corn harvest for 2021 documented in the January 2021 WASDE Report #608 is 14,183 million bushels consistent with actual data. The projected 2021 harvest can be compared to 14,507 million bushels in 2020 and is 6.4 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was lowered 1.0 percent to 5,650 million bushels. The “Ethanol and Byproducts” category was lowered 1.9 percent to 4,950 million bushels based on reduced domestic demand for E-10 due to COVID-19 restrictions and competition in the export markets. Corn exports were reduced 3.8 percent to 2,550 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 reduced 8.8 percent 1,552 million bushels.

 

The forecast USDA farm price for corn was raised to 420 cents per bushel. At 15H00 on January 12th after release of the WASDE the CME quotations for March corn was up 22.5 percent from the quotation on December 10th.

 

JANUARY 2021 WASDE #608 PROJECTIONS FOR THE 2021 CORN HARVEST:

 

Harvest Area

82.5 m acres

(90.8 m. acres planted, harvest corresponding to 90.9% of acres harvested)

Yield

172.0 bushels per acre

(was 175.8 bushels per acre in December WASDE.)

Beginning Stocks

1,919 m. bushels

Production

14,183 m. bushels

Imports

25 m. bushels

Total Supply

16,127 m. bushels

Proportion of Supply

Feed & Residual

5,650 m. bushels

35.1%

Food & Seed

1,425 m bushels

 8.8%

Ethanol & Byproducts

4,950 m. bushels

30.7%

Domestic Use

12,025 m. bushels

74.6%

Exports

2,550 m. bushels

15.8%

Ending Stocks

1,552 m. bushels

 9.6%

Ending Stock-to-domestic use proportion

12.9%

(Was 14.0 % in the December 2020 WASDE Report)

1 metric ton = 39.368 bushels

 

Average Farm Price: $4.20 per bushel. (Up 20 cents from the December 2020 WASDE Report)

 

SOYBEANS and SOYBEAN MEAL

USDA projected the 2021 soybean crop at 4,135 million bushels. The 2021 harvest is based on a yield of 50.2 bushels per acre. With respect to use parameters, crushings were raised 0.4 percent to 2,200 million tons. Projected exports were raised 1.4 percent to 2,230 million bushels, based on orders from China during the 2020-2021 market year in accordance with the Phase-One Trade Agreement. From early October to the present 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 harvested. Ending stocks were adjusted downward 20 percent from 175 million bushels in December to 140 million bushels as predicted in the January 2021 WASDE.

 

The USDA projection of the ex-farm price for soybeans for the 2020 harvest is 1,115 cents per bushel, up 60 cents per bushel from the December 2020 WASDE estimate. At 15H00 on January 12th and following release of the WASDE, the CME quotations for soybeans for March 2021 delivery was 1,423 cents per bushel, up 22.6 percent compared to December 10th.

 

JANUARY 2021 WASDE #608 PROJECTION FOR THE 2021 SOYBEAN HARVEST:-

 

Harvest Area

82.3 m acres

(83.1 m. acres planted, harvest corresponding to 99.0% of planted acreage)

Yield

50.2 bushels per acre

(Was 50.7 bushels per acre in the December WASDE)

Beginning Stocks

525 m. bushels

(Up fractionally from the December 2020 WASDE)

Production

4,135 m. bushels

Imports

35 m. bushels

Total Supply

4,695 m. bushels

Proportion of Supply

Crushings

2,200 m. bushels

46.8%

Exports

2,230 m. bushels

47.5%

Seed

103 m. bushels

 2.2%

Residual

22 m. bushels

0.5%

Total Use

4,555 m. bushels

97.0%

Ending Stocks

140 m. bushels

3.0%

(Was 175 m. bushels in the December 2020 WASDE)

1 metric ton = 76.34 bushels

 

Average Farm Price: 1,115 cents per bushel (Up 60 cents per bushel from the December 2020 WASDE Report)

 

The projected supply of soybean meal was raised 0.4 percent to 52.9 million tons. Domestic use was unchanged at 38.3 million tons. Exports were raised 0.8 percent to 14.25 million tons. The USDA increased the ex plant price of soybean meal to $390 per ton, up $20 per ton. At 15H00 on January 12th the CME quotation for March 2021 delivery of soybean meal was $472, up 21.0 percent compared to the January 12th quotation.

 

JANUARY 2021 WASDE #608 PROJECTION OF SOYABEAN MEAL PRODUCTION AND USE

 

Beginning Stocks

0.341 m. tons

Production

51.959 m. tons

Imports

0.600 m. tons

Total Supply

52.900 m. tons

Domestic Use

38.300 m. tons

Exports

14.250 m. tons

Total Use

52.550 m. tons

Ending Stocks

0.350 m. tons

  1. = million

Average Price ex plant:$390 (Up $20 per ton from the December 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 December WASDE included the following appraisals:-

 

“Global coarse grain production for 2020/21 is forecast down 9.3 million tons to 1,438.5 million. This month’s foreign coarse grain outlook is for lower production and consumption, and smaller ending stocks. Foreign corn production is reduced with declines for Argentina and Brazil more than offsetting increases for China and India. For Argentina, dryness during December reduces yield prospects for early-planted corn in key central growing areas. Brazil is lowered reflecting reduced yield expectations for first-crop corn in southern Brazil.”

 

“Major global coarse grain trade changes for 2020/21 include reduced corn imports for the EU-27+UK, Mexico, Iran, Vietnam, Colombia, Chile, Egypt, Malaysia, Peru, and Saudi Arabia, with a partly offsetting increase for China. For 2019/20, Argentina’s exports for the marketing year beginning in March 2020 are lowered based on the shipment pace to date. Foreign corn ending stocks are lower, mostly reflecting reductions for Brazil and the EU- 27+UK. Global corn stocks, at 283.8 million tons, are down 5.1 million”.

 

“Foreign 2020/21 oilseed production is relatively unchanged, with higher sunflowerseed mostly offset by lower soybean, cottonseed, peanut, rapeseed, and palm kernel output. Sunflowerseed production is increased 0.5 million tons to 13.5 million for Russia based on recent government estimates. Soybean production is lowered 2 million tons to 48 million for Argentina and 0.2 million to 2.2 million for Uruguay, reflecting dry weather conditions in December and early January. Mostly offsetting lower South American soybean production is a 2.1-million-ton increase to 19.6 million for China on recent government data. Global soybean stocks are lowered 1.3 million tons to 84.3 million, with lower stocks for Argentina and the United States that are partly offset by higher stocks for China”.

 

Updated World production and use of total grains and oilseeds is summarized for the 2020/2021 season taking into account Northern and Southern Hemisphere production:-

 

Factor: billon m. tons

Coarse Grains

Oil Seeds

Output

1.438*

595

Supply

1.770

705

World Trade

225

193

Use

1.456

512

Ending Stocks

314

 97

*Values rounded to million m. tons

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


 
Copyright © 2021 Simon M. Shane