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

USDA-WASDE FORECAST #616 SEPTEMBER 10th 2021

09/10/2021

OVERVIEW

The September WASDE documented the 2021growing season with incremental changes in harvest acreage of corn and soybeans. The USDA ERS revised the projected ending stocks of corn, soybeans and meal based on crop conditions, weather, export trends and harvests in Brazil and in the Southern hemisphere. The corn acreage to be harvested is currently estimated at 85.1 million acres (84.5 million acres in August WASDE) Soybeans will be harvested from 86.4 million acres, (86.7 in August).

 

The September 2021 WASDE estimate of corn yield was raised 1.0 percent to 176.3 bushels per acre, (175.8 bushels per acre in 2020). The estimate of soybean yield was raised 1.2 percent to 50.6 bushels per acre. (50.7 bushels per acre in 2020). Final yield values will be adjusted subsequently based on weather conditions and crop health.

 

The September 2021 USDA projection for the ending stock of corn was raised by 13.4 percent to 1,408 million bushels based on a larger harvest. Greater supply and lower domestic crush partly offset by higher exports, resulted in a projection of ending stock for soybeans being raised 20 percent to 185 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with fluctuation in exports. China has placed orders in accordance with their needs and central government policy rather than compliance with the Phase-One trade agreement of January 2020. The September WASDE projection lowered the price of corn by 30 cents per bushel to $5.45 per bushel. Soybeans were reduced 80 cents per bushel to 1290 cents per bushel.

 

It is accepted that projections are based on the reality that China sharply increased purchases of commodities during the recently concluded market year partly to cover low stock caused by COVID-related disruptions in imports during the first quarter of 2020. China booked substantial orders for corn and soybeans from September 2020 onwards for the 2020-2021market year and is placing orders now for the subsequent market year. Reports on volumes of commodities exported to China and other nations are included in weekly editions of CHICK-NEWS and EGG-NEWS as USDA data is released.

 

CORN

The corn harvest for 2021 projected in the August 2021 WASDE Report #616 is 14,996 million bushels up 1.6 percent from the August report consistent with a 1.0 percent higher yield. The projected 2021 harvest can be compared to 14,507 million bushels in 2020 and is projected to be 1.0 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was raised 1.3 percent from the July report to 5,700 million bushels. The “Ethanol and Byproducts” category was held at 5,200 million bushels despite higher domestic demand for E-10 and other blends following relaxation of COVID-19 restrictions. Projected corn exports were increased 3.1 percent or 75 million bushels to 2,475 million bushels. Ending stocks were raised by 13.4 percent to 1,408 million bushels.

Availability of corn from major competitor Brazil will be lowered by drought. Argentine although harvesting a large crop has experienced disruptions in exports.

 

The forecast USDA farm price for corn was reduced 30 cents per bushel to 545 cents per bushel. At close of trading on September 10th after release of the September WASDE the CME quotation for July corn was down 69 cents to 503 cents per bushel, down 12.1 percent from the quotation on August 12th and currently 7.7 percent below the September USDA projection for 2021.

 

 SEPTEMBER 2021 WASDE #616 PROJECTIONS FOR THE 2021 CORN HARVEST:

Harvest Area

85.1 m acres

(93.3 m. acres planted, harvest corresponding to 91.8% of acres harvested)

Yield

176.3 bushels per acre

(was 174.6 bushels per acre in the August WASDE.)

Beginning Stocks

1,187 m. bushels

Production

14,996 m. bushels

Imports

25 m. bushels

Total Supply

16,208 m. bushels

Proportion of Supply

Feed & Residual

5,700 m. bushels

35.1%

Food & Seed

1,425 m bushels

 8.8%

Ethanol & Byproducts

5,200 m. bushels

32.1%

Domestic Use

12,325 m. bushels

76.0%

Exports

2,475 m. bushels

15.2%

Ending Stocks

1,408 m. bushels

 8.8%

Ending Stock-to-domestic use proportion

11.4%

(Was 10.1 % in the August 2021 WASDE Report)

1 metric ton = 39.368 bushels

 

Average Farm Price: $5.45 per bushel. (Down 30 cents per bushel from the August 2021 WASDE Report)

 

SOYBEANS and SOYBEAN MEAL

USDA increased the projection for the 2021 soybean crop to 4,374 million bushels based on a revised September WASDE projection of a yield of 50.6 bushels per acre. With respect to use parameters, crushings were reduced 1.1 percent 2,180 million tons. Projected exports were raised 1.7 percent to 2,090 million bushels, consistent with orders from China during the 2020-2021market year. This is attributed to their current requirements for animal feed and also to lock-in prices on a static or declining market rather than through any sense of obligation to comply with the January 2020 Phase-One Trade Agreement. From early October 2020 to the present, prices increased in response to bookings for the 2020-2021market year. Prior to 2018 our largest trading partner for agricultural commodities imported the equivalent of 25 percent of U.S. soybeans harvested. Ending stocks were raised to 185 million bushels up from 155 million bushels in the August 2021 WASDE.

 

The USDA projection for the ex-farm price for soybeans for the 2021 harvest was lowered 80 cents per bushel to 1,290 cents per bushel. At close of trading on September 10th following release of the WASDE, the CME quotation for September 2021 delivery was 1,280 cents per bushel, down 134 cents or 9.4 percent compared to the August 12th 2021 quotation for current month delivery and 0.7 percent above the September USDA projection for 2021.

 

SEPTEMBER 2021 WASDE #616 PROJECTION FOR THE 2021 SOYBEAN HARVEST:-

Harvest Area

86.4 m acres

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

Yield

50.6 bushels per acre

(Was 50.0 bushels per acre in the August WASDE)

Beginning Stocks

175 m. bushels

(Was 160 million bushels in the August WASDE)

Production

4,374 m. bushels

Imports

25 m. bushels

Total Supply

4,574 m. bushels

Proportion of Supply

Crushings

2,180 m. bushels

47.7%

Exports

2,090 m. bushels

45.7%

Seed

104 m. bushels

 2.3%

Residual

14 m. bushels

0.3%

Total Use

4,379 m. bushels

96.0%

Ending Stocks

185 m. bushels

4.0%

(Up 30 million bushels from the Aug. 2021 WASDE)

1 metric ton = 76.34 bushels

 

Average Farm Price: 1,290 cents per bushel (Down 80 cents per bushel from the August 2021 WASDE Report)

 

The projected supply of soybean meal was reduced by 1.2 percent to 52.3 million tons based on lower production. Domestic use was lowered to 37.6 million tons. Exports were unchanged at 14.20 million tons. The USDA lowered the projected ex plant price of soybean meal by $25 per ton from July to $360 per ton. At close of trading on September 10th the CME quotation for September 2021 delivery of soybean meal was $342, down $12 per ton or 3.4 percent compared to the August 12th CME quotation and 5.0 percent below the September USDA WASDE projection for 2021.

 

SEPTEMBER 2021 WASDE #616 PROJECTION OF SOYABEAN MEAL PRODUCTION AND USE

Beginning Stocks

0.450 m. tons

Production

51.400 m. tons

Imports

0.450 m. tons

Total Supply

52.300 m. tons

Domestic Use

37.600 m. tons

Exports

14.200 m. tons

Total Use

51.8000 m. tons

Ending Stocks

0.500 m. tons

  1. = million

Average Price ex plant:$360 (Down $25 per ton from the August 2021 WASDE Reports)

 

IMPLICATIONS FOR PRODUCTION COST

 

The price projections based on CME quotations for corn and soybeans suggest increasing 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 0.44 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 Report included the following appraisals by USDA:-

 

CORN

“This month’s 2021/22 foreign coarse grain outlook is for larger production, greater trade, and increased stocks relative to last month. Foreign corn production is forecast higher relative to last month with increases for China and Argentina more than offsetting reductions for Russia and Serbia. China corn production is raised with a boost in yield prospects, based mostly on near to above normal rainfall in the key Northeast provinces of Heilongjiang, Jilin, Inner Mongolia, and Liaoning. Argentina corn production is raised based on expectations of higher area. Foreign barley production is virtually unchanged, as increases for Australia, Ukraine, and the EU are essentially offset by declines for Canada and Russia.

 

For China, corn feed and residual use for 2020/21 is lowered based on indicated soybean meal equivalent protein consumption and expanded use of alternative energy feedstuffs such as barley and sorghum. For 2021/22, feed and residual use is raised based mostly on a larger crop and lower expected internal market prices. Food, seed and industrial use is lowered for 2020/21 and 2021/22 based on a reduction in the expected amount of corn used for ethanol and corn product exports. Despite a forecast increase in corn production, imports are unchanged for 2021/22 as the gap between China’s domestic and international corn prices is expected to persist, particularly in the feed-deficit South.

 

Major global coarse grain trade changes for 2021/22 include larger corn exports for Argentina, with partly offsetting reductions for Serbia and Russia. Corn imports are raised for Canada and Mexico but are reduced for Vietnam. For 2020/21, for the local marketing year beginning March 2021 corn exports are lowered for Brazil but raised for Argentina. Foreign corn ending stocks for 2021/22 are raised 8.8 million tons to 261.9 million, mostly reflecting an increase for China.

 

OILSEEDS

“The 2021/22 foreign oilseed supply and demand forecasts include higher beginning stocks and lower production, exports, and crush. Foreign oilseed production is lowered 1.5 million tons to 499.8 million mainly on lower canola production for Canada and the EU. Partly offsetting is higher canola output for Australia and higher peanut production for India. Canada’s canola crop is lowered 2.0 million tons to 14 million, reflecting recent government reports”.

 

“Lower canola supplies for Canada leads to lower exports of the oilseed and products to the EU, China, and the United States. Lower global rapeseed supply is offset by increased soybean beginning stocks, mainly driven by higher-than-expected 2020/21 imports for China. Higher beginning stocks for China and higher U.S. ending stocks account for most of the global 2021/22 soybean ending stocks increase, which are raised 2.7 million tons to 98.9 million. Another notable oilseed change includes higher soybean meal imports for India as the government allows shipments of soybean meal made from genetically modified soybeans through October 31”.

 

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: billion m. tons

Coarse Grains

Oilseeds

Output

1.497*

629

Supply

1.813

739

World Trade

249

200

Use

1.490

528

Ending Stocks

324

111

*Values rounded to million metric ton

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


 
Copyright © 2021 Simon M. Shane