by Ben Potter, Farm Futures
With the first look at 2021/22 supply and demand estimates, the May 2021 World Agricultural Supply and Demand Estimates (WASDE) report is full of valuable insights to unpack. New crop corn futures edged lower on reduced demand estimates in the new crop year, largely from a smaller export number.
Old crop soybean futures rose on smaller Argentine production this year and bullish soybean import projections from China. Prospects for a large U.S. wheat harvest this summer sent wheat futures lower following the report’s release.
USDA’s outlook for corn this month assumes farmers will return to trendline yields of 179.5 bushels per acre for a total production of 15.0 billion bushels. The agency also expects improved domestic use, lower exports and higher ending stocks.
USDA predicts U.S. corn exports will decline 325 million bushels during the 2021/22 marketing year. A hiccup in South American production should help U.S. prospects during the first half of the upcoming marketing year, but USDA also expects a 335-million-bushel increase in Russian and Ukrainian exports in 2021/22, which should limit domestic upside potential.
With that in consideration, ending stocks for 2021/22 should rise 250 million bushels year-over-year to 1.507 billion bushels, according to USDA. Analysts were expecting that number to be much lower, with an average trade guess of 1.344 billion bushels.
“The season-average corn price received by producers in 2021/22 is projected at $5.70 per bushel, up $1.35 from a year ago when much of the crop was marketed at lower prices,” the report also notes.
South American production saw some revisions from April. In Brazil, production potential fell 275 million bushels to 4.016 billion bushels. In Argentina, USDA held estimates steady from a month ago, with 1.850 billion bushels.
World ending stocks for 2021/22 were also higher than trade guesses, coming in at 11.508 million bushels. Analysts had offered up an average estimate of 11.144 prior to today’s report.
USDA’s 2021/22 soybean outlook calls for lower supplies and exports, an improving crush volume and higher ending stocks compared to the current marketing year. USDA estimates this year’s soybean production will reach 4.4 million bushels, based on more acres and trendline yields. Favorable crush margins should push the 2021/22 crush 35 million bushels higher year-over-year to reach 2.2 billion bushels.
Soybean exports this upcoming marketing year are expected to slide 205 million bushels below 2020/21 volume, to 2.1 billion bushels. That leaves ending stocks at 140 million bushels, which was slightly above the average trade guess of 138 million bushels. The U.S. share of total global exports is also expected to drop from 36% this year down to 33%. Prices could average $13.85 per bushel, which is an improvement of $2.60 compared to 2020/21.
South American production saw estimates hold steady for Brazil, with 4.997 billion bushels, while Argentina’s production slid 18 million bushels lower from a month ago, to 1.727 billion bushels.
Globally, USDA estimates 2021/22 soybean stocks at 3.347 billion bushels. That’s a bit above the average trade guess of 3.238 billion bushels.
To read the entire report click here.