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USDA-WASDE FORECAST #617 OCTOBER 12th 2021

10/12/2021

OVERVIEW

The October WASDE documented the 2021growing season with no changes in harvest acreage of either corn or soybeans. The USDA ERS revised the projected ending stocks of corn, soybeans and soybean meal based on crop conditions and the harvest in progress. The corn acreage to be harvested is currently estimated at 85.1 million acres. Soybeans will be harvested from 86.4 million acres.

 

The October 2021 WASDE estimate of corn yield was raised 0.1 percent to 176.5 bushels per acre, (175.8 bushels per acre in 2020). The estimate of soybean yield was raised 1.8 percent to 51.5 bushels per acre. (50.7 bushels per acre in 2020). Final yield values will be adjusted subsequently based on crop conditions and harvest data.

 

The October 2021 USDA projection for the ending stock of corn was raised by 6.5 percent to 1,500 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 73.0 percent to 320 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 February 2020. The October WASDE projection retained the price of corn at $5.45 per bushel. Soybeans were reduced 4.3 percent to 1,235 cents per bushel. Soybean Meal was reduced by 9.7 percent to $325 per short ton.

 

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 drought, and 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 current 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 October 2021 WASDE Report #617 is 15,019 million bushels up 0.2 percent from the September report consistent with a 0.1 percent higher yield. The projected 2021 harvest can be compared to 14,507 million bushels in 2020 and is projected to be 0.9 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was lowered 0.9 percent from the September report to 5,650 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 1.0 percent or 25 million bushels to 2,500 million bushels. Ending stocks were raised by 6.5 percent to 1,500 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 unchanged at 545 cents per bushel. At 14H00 on October 12th after release of the October WASDE the CME quotation for July corn was down to 520 cents per bushel but up 3.3 percent from the quotation on September 10th and currently 4.6 percent below the USDA projection.

 

OCTOBER 2021 WASDE #617 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

176.5 bushels per acre

(was 176.3 bushels per acre in the September WASDE.)

Beginning Stocks

1,236 m. bushels

 

Production

15,019 m. bushels

 

Imports

25 m. bushels

 

Total Supply

16,280 m. bushels

Proportion of Supply

Feed & Residual

5,650 m. bushels

34.7%

Food & Seed

1,430 m bushels

8.8%

Ethanol & Byproducts

5,200 m. bushels

31.9%

Domestic Use

12,280 m. bushels

75.4%

Exports

2,500 m. bushels

15.4%

Ending Stocks

1,500 m. bushels

9.2%

Ending Stock-to-domestic use proportion

12.2%

(Was 11.4 % in the September 2021 WASDE Report)

1 metric ton = 39.368 bushels

Average Farm Price: $5.45 per bushel. (Unchanged from the September 2021 WASDE Report)

 

SOYBEANS and SOYBEAN MEAL

USDA increased the projection for the 2021 soybean crop to 4,448 million bushels based on a revised October WASDE projection of a yield of 51.5 bushels per acre. With respect to use parameters, crushings were raised 0.5 percent 2,190 million tons. Projected exports were retained from September at 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 February 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 73.0 percent to 320 million bushels up from 185 million bushels in the September 2021 WASDE.

 

The USDA projection for the ex-farm price for soybeans for the 2021 harvest was lowered 55 cents per bushel to 1,235 cents per bushel. At 14H00 on October 12th following release of the WASDE, the CME quotation for November 2021 delivery was 1,195 cents per bushel, down 85 cents or 6.6 percent compared to the September 10th 2021 quotation for November delivery and 3.2 percent below the October USDA-WASDE projection for 2021.

 

OCTOBER 2021 WASDE #617 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

51.5 bushels per acre

(Was 50.6 bushels per acre in the September WASDE)

Beginning Stocks

256 m. bushels

(Was 175 million bushels in the September WASDE)

Production

4,448 m. bushels

 

Imports

15 m. bushels

 

Total Supply

4,719 m. bushels

Proportion of Supply

Crushings

2,190 m. bushels

46.4%

Exports

2,090 m. bushels

44.3%

Seed

104 m. bushels

2.2%

Residual

15 m. bushels

0.3%

Total Use

4,399 m. bushels

93.2%

Ending Stocks

320 m. bushels

6.8%

(Up 135 million bushels from the Sept. 2021 WASDE)

1 metric ton = 76.34 bushels

Average Farm Price: 1,235 cents per bushel (Down 55 cents per bushel from the September 2021 WASDE Report)

 

The projected supply of soybean meal was increased by 0.4 percent to 52.5 million tons based on higher production. Domestic use was raised to 37.9 million tons. Exports were unchanged at 14.20 million tons. The USDA lowered the projected ex plant price of soybean meal by $35 per ton from September to $325 per ton. At 14H00 on October 12th the CME quotation for December 2021 delivery of soybean meal was $312, down $30 per ton or 8.8 percent compared to the September 10 th CME quotation and 4.0 percent below the October USDA-WASDE projection for 2021.

 

OCTOBER 2021 WASDE #617 PROJECTION OF SOYABEAN MEAL PRODUCTION AND USE

Beginning Stocks

0.400 m. tons

Production

51.650 m. tons

Imports

0.450 m. tons

Total Supply

52.500 m. tons

Domestic Use

37.900 m. tons

Exports

14.200 m. tons

Total Use

52.100 m. tons

Ending Stocks

0.400 m. tons

m. = million

Average Price ex plant : $325 (Down $35 per ton from the September 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 AND COARSE GRAINS

 

“Global coarse grain production for 2021/22 is forecast down 2.9 million tons to 1,494.0 million. The 2021/22 foreign coarse grain outlook is for lower production, virtually unchanged trade, and larger stocks relative to last month. Foreign corn production is forecast essentially unchanged as increases for the EU, Canada, Venezuela, and Serbia are largely offset by declines for Ukraine, Russia, and Guatemala. EU corn production is raised reflecting increases for Poland and Romania more than offset declines for France and Bulgaria. Corn production in Canada is higher reflecting favorable yield prospects for Ontario. Projected corn yields for Russia and Ukraine are lowered based on reported harvest results to date”.

 

“Corn exports are raised for India, the United States, and the EU, with partly offsetting reductions for Ukraine, Russia, and Vietnam. For 2020/21, corn exports for Brazil are lowered for the local marketing year beginning March 2021, based on shipments through the month of September. For 2021/22, corn imports are lowered for Vietnam, Chile, Algeria, Israel, Lebanon, and Saudi Arabia, but raised for Bangladesh. Foreign corn ending stocks are higher, mostly reflecting increases for China and Mexico, with a partly offsetting reduction for Ukraine. Global corn stocks, at 301.7 million, are up 4.1 million”.

 

OILSEEDS

 

“Foreign 2021/22 oilseed production is lowered 2.4 million tons to 497.4 million on lower soybean, sunflowerseed, and rapeseed output. Soybean production is lowered for Argentina, India, and the EU. Argentina’s production is lowered 1.0 million tons to 51.0 million on lower harvested area. Sunflowerseed production is lowered for Ukraine and Russia on recent harvest results. Canola production for Canada is lowered 1.0 million tons to 13.0 million, reflecting reports by Statistics Canada”.

 

“Global soybean supply and demand forecasts for 2021/22 include higher beginning stocks, lower crush, and higher ending stocks. Higher beginning stocks reflect increases for the United States, Argentina, and China. Argentina’s beginning stocks are raised on a downward revision to 2020/21 crush. The 2021/22 crush for Argentina is also lowered, leading to lower exports of meal and oil. China’s 2020/21 crush is lowered 1.0 million tons to 93.0 million based on end of year data. Global soybean ending stocks for 2021/22 are increased 5.7 million tons to 104.6 million, with higher stocks for the United States, Argentina, and 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: billion m. tons

Coarse Grains

Oilseeds

Output

1.494*

628

Supply

1.814

742

World Trade

250

197

Use

1.486

526

Ending Stocks

328

117

*Values rounded to million metric ton

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


 
Copyright © 2021 Simon M. Shane