USDA fed corn bulls within the June 2021 World Agricultural Provide and Demand Estimates (WASDE) report launched this morning. The World Agricultural Outlook Board (WOAB) slashed 2020/21 corn ending shares by 150 million bushels – about 100 million greater than analysts have been anticipating – on rising export and ethanol demand. A diminished corn crop from Brazil additionally lent bullish energy to the corn complicated whereas wheat futures have been blended following increased estimates for the 2021 winter wheat crop within the U.S.
“Old crop corn stole the show in today’s WASDE report,” says Farm Futures grain market analyst Jacquie Holland. “March and April 2021 featured the largest two monthly corn export loading volumes – and revenues – in recorded history and USDA took that to heart. Strong Chinese demand – as well as rising overall global feed demand – triggered USDA’s upward revisions to the U.S. corn export forecast for 2020/21.”
USDA lowered 2021/22 corn ending shares by 150 million bushels after noting a 75-million-bushel increase in ethanol demand and a 75-million-bushel uptick in export estimates. That was a extra bullish demand than analysts anticipated, leaving ending shares at 1.357 billion bushels versus the common commerce guess of 1.423 billion bushels.
“Export inspection data for the month of May … implies continued robust global demand for U.S. corn, despite high prices,” USDA famous in right now’s report. The company saved the season-average farm worth regular, at $5.70 per bushel.
“As summer travel season heats up and more Americans take to the roads in the post-pandemic era, ethanol production has largely returned to pre-pandemic levels over the past month,” Holland notes. “Added capacity has returned online after idling during the pandemic and refiner and blender usage of ethanol continues to rise.”
Each strikes will shrink U.S. corn provides to the tightest stage since 1995/96, Holland provides. A smaller Brazilian crop as a consequence of ongoing drought stress and late planting points with the safrinha crop additional tightened international provides because the corn provide state of affairs begins to look more and more extra like that of soybeans, she says.
“As drought conditions persist in the Upper Midwest and farmers battle slow emergence rates, corn futures will likely give soybeans a strong run their money in the coming weeks,” Holland concludes.
Meantime, USDA’s international coarse grain outlook assumes increased manufacturing, marginally increased commerce and bigger ending shares in comparison with Could. Abroad 2021/22 ending shares moved barely increased after will increase in Pakistan and South Africa have been partially offset by reductions in Canada.
In South America, USDA sees some eroding manufacturing potential in Brazil, decreasing its Could estimate of 4.016 billion bushels down to three.878 billion bushels this month. Manufacturing estimates for Argentina held regular, at 1.850 billion bushels.
USDA assumes increased soybean provide and use projections for 2021/22. Soybean crush estimates within the present advertising 12 months have been lowered by 15 million bushels to 2.175 billion bushels “based on a lower forecast for soybean meal domestic disappearance and higher soybean meal imports.” Excessive costs and stiff competitors abroad for soyoil means a 400-million-pound discount in exports.
“USDA walked back record highs for 2020/21 U.S. soybean crush volumes as processors scramble to source feedstocks from dwindling on-farm stocks following an aggressive export and crush season earlier in the 2020/21 marketing year,” Holland says. “Cash offerings at crush plants in the Eastern Corn Belt have ranged between $0.45-$1.10/bushel over futures prices in recent days, reflecting scarce supplies and strong usage rates.”
Processing charges will doubtless decline till the 2021 crop is harvested, although it’ll face stiff competitors from export markets at the moment which may supply farmers some profitable harvest pricing choices, Holland says. U.S. ending shares widened again to the second-tightest stage on file because of the decrease crush charges.
“More biodiesel production capacity is expected to come online in the coming years as the demand for green energy – especially for commercial vehicles – soars,” she says. “Even with tight capacities, the demand forecasts suggest that high soybean prices may be around for a while.”
Soybean ending shares for 2021/22 rose greater than anticipated, transferring to 155 million bushels versus the common commerce guess of 146 million bushels. These are nonetheless traditionally tight shares, nevertheless. World ending shares for 2021/22 additionally moved above analyst estimates, going from 3.347 billion bushels in Could as much as 3.400 billion bushels this month.
USDA made some slight revisions to its South American soybean manufacturing estimates. Whereas Argentinian manufacturing held regular from final month, at 1.727 billion bushels, Brazil moved modestly increased – now at 5.033 billion bushels.
For wheat, USDA assumes “larger supplies, higher domestic use, unchanged exports and slightly lower stocks.” Ending shares for 2021/22 moved from 774 million bushels in Could right down to 770 million bushels, in distinction with the common commerce guess of 783 million bushels.
Additional, USDA predicts all-wheat manufacturing will attain 1.898 billion bushels this 12 months, an upward revision of 26 million bushels after the company noticed an uptick in HRW and SRW manufacturing. All-wheat yield estimates are at 50.7 bushels per acre, which is 0.7 bpa increased than Could estimates.
USDA saved its season-average farm worth estimates regular, at $6.50 per bushel.
Globally, USDA is bullish for manufacturing in a number of key areas, together with the European Union, Russia and Ukraine, which all moved increased from a month in the past. Complete world manufacturing in 2021/22 is predicted to succeed in a file complete of 29.189 billion bushels. Ending shares are estimated at 10.906 billion bushels, with China accounting for practically half (48%) of that complete.
“But rising livestock and human food demand increased global wheat consumption rates to 29.1 billion bushels, leaving global wheat stocks at the tightest level since the 2016/15 season,” Holland notes. “Ending global stocks for 2021/22 increased slightly higher than analyst expectations on the higher production as Chicago futures inched lower on the prospect of higher global soft wheat competition in the export market.”
Click here to learn the complete June WASDE report.