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

COMMODITY REPORT

09/10/2021

WEEKLY COMMODITY REPORT: SEPTEMBER 10TH 2021.

  • Commodity prices were mostly down this past week with corn ending substantially lower continuing the trend of the previous week. Factors influencing prices in either direction included:-
  • Hurricane Ida disrupting exports for at least a month and damaging terminals in Louisiana (marked downward pressure)
  • Release of the September 10th WASDE (limited downward pressure);
  • Results of the ProFarmer crop review (downward pressure)
  • Lower than anticipated export sales especially to China (downward pressure);
  • Moderation of drought in many counties in the corn belt and especially in Iowa (moderate downward pressure);
  • Drought in Brazil causing a low Safrinha (second) crop (upward pressure);
  • Restoration of shipments from Argentina albeit at lower than normal volume (moderate downward pressure);
  • Central government of China attempting to stabilize prices of pork and corn (downward pressure).

 

Projected harvests and ending stocks in the U.S. were updated in the September 10th WASDE especially since there is greater clarity on acreage and the effects of weather and trade to date on ending stocks. Annual field assessment of crop conditions by ProFarmer scouts was released two weeks ago. The USDA commenced evaluation of crop condition this past week.

 

  • US producers are now receiving and conversely livestock producers in the Midwest will pay above $5.00 per bushel for corn and crushers will pay $12.80 per bushel for soybeans plus transport and basis in September. Corn was down 2.5 percent this past week and soybeans were down <0.1 percent for September delivery. Soybean meal was up 1.2 percent for September delivery compared to last week reflecting the decline in the price of soybeans and suspension of exports from lower Mississippi terminals following Hurricane Ida.
  • The FAS Export Report released on September 10th for the week ending September 2nd reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 24.15 million metric tons (95.2 million bushels) with 0.17 million metric tons (6.7 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 0.33 million metric tons (11.8 million bushels).
  • The FAS Export Report released on September 10th for the week ending September 2nd reflecting market year 2021-2022 recorded outstanding export orders for soybeans amounting to 21.0 million metric tons (771 million bushels) with 0.01 million metric tons (0.3 million bushels) actually shipped. Weekly soybean orders attained 0.07 million metric tons (2.6 million bushels)
  • During the week ending September 2nd 60,700 metric tons of soybean meal and cake were ordered for the market year 2021-2022. The quantity shipped amounted to 44,300 metric tons.

 

The following quotations for delivery in the months as indicated were posted by the CME at close of trading on September 10th 2021, compared with values posted at close of trading on September 2nd 2021 (in parentheses):-

COMMODITY

 

Corn (cents per bushel)

Sept. 503 (516)

Dec. 516 (525)

Soybeans (cents per bushel)

Sept. 1,280 (1,279)

Nov. 1,288 (1,282)

Soybean meal ($ per ton)

Sept. 342 (338)

Dec. 343 (340)

Changes in the price of corn, soybeans and soybean meal over five trading days this past week were:-

COMMODITY CHANGE FROM PAST WEEK FOR MONTH OF DELIVERY AS INDICATED

Corn: Sept. quotation down 13 cent per bushel (-2.5 percent)

Soybeans: Sept. quotation up 1 cents per bushel (+<0.1 percent)

Soybean Meal: Sept. quotation up $4 per ton (+1.2 percent )

 

  • For each 10 cent 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 pound live weight

 

  • For each $10 per ton change in the price 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 pound live weight

 

The changes in the prices of corn and soybean meal for September 10th compared with September 2nd quotations for September delivery would decrease nest-run production cost for eggs by 0.5* cents per dozen and for broilers 0.2* cents per live pound extending the decrease from the previous week .

 

Year-to-date, escalation in the prices of major ingredients has added 3.1 cents per dozen eggs and 1.8 cents per live-weight lb. to broiler production cost

*(rounded to 0.1cent)

 

The USDA weekly wholesale feedstuffs prices expressed per short ton posted on August 31st (with previous week in parentheses) were:-

  • Corn: $175 ($192), Chicago
  • Soybean Meal: $341 ($351), Central Illinois
  • Meat and Bone Meal: $390 ($400), Central Midwest
  • DDGS: $198 ($203), Eastern corn belt

 

According to the September 10th WASDE, corn harvested in calendar 2021 will attain 14,996 million bushels with ending stocks projected at 1,408 million bushels, up 13.4 percent from the 1,242 million bushels in the August 2021 WASDE Report. Values will be updated reflecting production, ongoing export volumes and domestic use in the September WASDE report, approaching harvest. Total corn stocks as at June 1st amounted to 4.11 billion bushels down 18 percent from June 1st 2020. Compared with the September 2nd value, the CME quotation for corn at close of trading on September 10th for current month delivery was down 13 cents per bushel to 503 cents.

 

The social restrictions imposed in the U.S. as a result of COVID-19, that are now being lifted, reduced ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2021 requirement, accepting a nominal ten percent addition to gasoline. This past week 73.8 percent of the U.S. ethanol fermentation volume was operational, based on January U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on higher domestic demand in addition to increasing approximately 25 percent of production that is exported. The industry received an adverse ruling from SCOTUS in late June invalidating year-round sales of E-15 approved previously by the EPA. According to the U.S. EIA, for the week ending September 3rd the industry produced on average 923,000 barrels per day, up 2.0 percent above the week ending August 27th 2021, reversing the eight consecutive week of declines but the eighth under 1 million gallons per day since June. On September 3rd ethanol stock was 3.4 percent below the previous week at 20.4 million barrels, representing an approximately 20-day reserve and confirming higher demand.

 

Ethanol was priced at $2.22 per gallon on September 10th unchanged over the previous 13 weeks and compared with a five-year low of $0.92 per gallon on March 26th 2020 during COVID restrictions. Concurrently RBOB gasoline at $2.14 per gallon (quoted, New York Harbor) was up 2 cents per gallon (0.9 percent) from the previous week, despite a decreased WTI crude price to $69.16 per barrel. The effect of suspension of offshore Gulf operations and refining in Louisiana has yet to be quantified. Gasoline is 8 cents per gallon less expensive than ethanol but with a 63 percent higher BTU rating.

 

With most plants among the 201 that were operational on January 1st 2021 now functioning, DDGS is freely available but commanded a higher price than in the first and second quarters of 2021. Eastern Corn-belt DDGS was priced at $198 per ton on September 7th 2021, $5 per ton higher than the previous week and $43 per ton more expensive than on September 1st 2020. Generally DDGS is currently incorporated at low inclusion levels, if at all, in egg-production formulas based on high price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS fluctuates in price

 

Soybeans continue to be the beneficiary of export demand by China and other nations in addition to domestic livestock production. The CME price for September delivery at close of trading on September 10th was higher by 1 cent per bushel to 1,280 cents compared to 1,279 cents per bushel on September 2nd for September delivery. The USDA projected a 2021 crop of 4,374 million bushels. Ending stocks according to the September 10th 2021 WASDE projection will be 185 million bushels, up 19.4 percent from the August WASDE Report. Total soybean stock as at June 1st amounted to 767 million bushels down 44 percent from June 1st 2020 indicating the extent of exports.

 

According to a release on August 16th by the National Oilseed Processors Association, 145 million bushels of soybeans were crushed in July compared to a pre-release estimate of 143 million bushels. The June crush value was 138 million bushels attributed to extended maintenance in anticipation of the fall harvest. On September 7th 2021 soybean meal quoted central Illinois was priced at $341 per ton, $10 per ton lower than the previous week and compared to $303 per ton on September 1st 2020.

 

On August 31st 2021 Meat and Bone meal quoted Central U.S. was $390 per ton, down $10 per ton from the previous week but compared to $218 per ton on September 1st 2020.

 

On August 24th the conversion of CNY 1 to the BRL was 0.82 BRL, down CNY 0.02 from the previous week. The conversion of US$1 to the CNY was set at CNY 6.67, down CNY 0.21 from the previous week.

 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipated that soybean imports by China would have attained 95 million metric tons during the 2020-2021 market year but in reality only 60.3 million tons was shipped through August 2021.

 

For the 2019/2020 market year China imported 2.1 million metric tons of corn from the U.S., 4.8 percent of total exports of 43.3 million tons, but 12 percent less than in the 2018/2019 market year. The USDA-FAS documented sales of U.S. corn to China through late August 2021 during the 2020/2021 year amounting to 73 million metric tons (2,876 million bushels) with 93 percent shipped.

 

For the 2019/2020 market year China imported 16.3 million metric tons of soybeans from the U.S., 36.2 percent of total exports of 44.9 million metric tons, but 3.9 percent less than in the 2018/2019 market year.

 

COMMENTS

Subscribers are referred to the August 12th 2021 WASDE #615 and the Crop Progress, Grain Stocks and Planned Acreage reports under the STATISTICS Tab.


 
Copyright © 2021 Simon M. Shane