Home Farm Equipment Surprisingly low corn yields spark rally

Surprisingly low corn yields spark rally

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USDA lowered 2021 corn yields greater than markets have been anticipating in immediately’s World Agricultural Provide and Demand Estimates report, with the newest tally coming in 1.1 bushels per acre decrease than the bottom commerce guess. That’s going to tighten 2021/22 corn shares to eight.5%, conserving provides tight and futures costs worthwhile within the coming months. Corn costs shot 5% greater minutes after the report was launched.

Soybean yields have been trimmed 0.8 bpa, which was properly inside commerce estimates. USDA made reasonable cuts to U.S. white wheat, spring wheat and durum manufacturing estimates once more. Manufacturing estimates have been additionally slashed for fellow prime exporters Russia (459M bu.), Canada (276M bu.) and the European Union (15M bu.), which can probably constrict world commerce flows within the coming months.

Corn

USDA’s new evaluation of the 2021 corn crop is a little more bearish than anticipated, citing a brand new common yield of 174.6 bushels per acre for a complete manufacturing of 14.75 billion bushels. Analysts did forecast a modest decline from July’s tally of 15.165 billion bushels, however the common commerce guess was greater than the company’s official quantity, at 15.004 billion bushels.

“That yield will still tie 2016’s as the third largest on record,” notes Farm Futures grain market analyst Jacquie Holland. “USDA’s new 2021 corn production forecasts of 14.75 billion bushels will be the second largest U.S. corn crop in history, behind 2016’s record haul of 15.15 billion bushels.”

State-by-state manufacturing potential is various broadly this yr, USDA notes. The company forecasts record-breaking corn crops for Illinois, Indiana and Ohio in 2021, whereas noting that Minnesota and South Dakota are “below a year ago.” USDA additionally raised its season-average farm value one other 15 cents to $5.75 per bushel.

USDA is projecting 2021/22 U.S. corn ending shares at 1.242 billion bushels, falling from the company’s estimate of 1.432 billion bushels in July however once more failing to match the common commerce guess of 1.297 billion bushels.

“Despite raising 2020/21 ending stocks on slowing old crop corn export volumes and trimming 2021/22 feed and export volumes, USDA expects the smaller 2021 crop will tighten new crop ending stocks to 1.24 billion bushels,” Holland says. “At a stocks-to-use ratio of 8.5%, this year’s crop will land as the fifth tightest on record over the past 60 years. That bodes very bullish for new crop corn prices and should offer farmers some lucrative pricing opportunities at harvest this year.”

Corn 2021/22 world ending shares additionally got here in reasonably under commerce estimates, transferring to 11.205 billion bushels.

“Major global coarse grain trade changes for 2021/22 include forecast corn export increases for Ukraine, Russia and India with reductions for Serbia and the EU,” immediately’s report famous. “Corn imports are raised for Bangladesh, Thailand and the United Kingdom but are reduced for Iran, Vietnam, Mexico, Egypt, Japan, Morocco, Saudi Arabia and Algeria.”

Soybean

USDA additionally initiatives decrease soybean yield and manufacturing potential versus July. The company trimmed common yield estimates from 50.8 bushels per acre a month in the past right down to 50.0 bpa in August – barely decrease than the common commerce guess of fifty.4 bpa. Manufacturing estimates have been trimmed by 66 million bushels to 4.439 billion bushels, which was additionally under the common commerce guess of 4.375 billion bushels.

“The new yield estimate is likely to be the fourth highest on record after a turbulent growing season kept the top end of yields away from producers,” Holland says.

U.S. 2021/22 ending shares for soybeans held regular versus July, at 155 million bushels. Analysts have been anticipating to see a modest enhance to 159 million bushels – both determine reveals traditionally tight home shares this coming season.

“Even with smaller 2020/21 export and crush usage rates, USDA does not anticipate that the 2021 crop will satisfy growing domestic and international demand for U.S. soybeans,” Holland says. “The new ending stocks to use ratio for 2021/22 will likely remain very similar to that of 2020/21 at a meager 3.5%.”

US soybean stock-to-use ratio chart

The season-average farm value for soybeans additionally held regular from final month, at $13.90 per bushel.

World ending shares for soybeans firmed from a month in the past, meantime, to three.533 billion bushels, thanks largely to Brazilian crops that appear to rewrite the file books on an annual foundation. USDA’s newest evaluation for 2020/21 soybean manufacturing in Brazil is at 5.033 billion bushels, with 2021/22 manufacturing estimated at 5.291 billion bushels. Each assessments are unchanged from July.

Wheat

USDA’s outlook for wheat within the August report requires “reduced supplies, lower domestic use, unchanged exports and decreased ending stocks.” Manufacturing estimates dropped 49 bushels from July, transferring to 1.697 million bushels. The majority of these reductions are attributable to decrease yields for the laborious crimson winter and mushy white winter wheat crops. All-wheat yield averages fell 1.3 bushels per acre to 44.5 bpa.

Ending shares for 2021/22 U.S. wheat fell 38 million bushels to 627 million bushels. That was decrease than the common commerce guess of 644 million bushels and means year-over-year shares at the moment are 26% decrease. USDA raised the season-average farm value by a dime, now at $6.70 per bushel.

“Wheat is not usually a significant beneficiary of new USDA updates,” Holland factors out. “In fact, wheat prices typically follow those of corn in the aftermath of WASDE reports. But in the past month, wheat has stepped out onto its own stage as global production shortfalls push prices higher.”

World 2021/22 wheat ending shares fell greater than 460 million bushels decrease, to 10.253 billion bushels. Analysts as soon as once more overshot USDA’s official numbers, with a median commerce guess of 10.587 billion bushels. The company lowered its manufacturing estimates for among the world’s prime producers this previous month, together with Russia, america and Canada.

Top global wheat producers and yield changes bar chart

“For the first time in over a year, USDA cut global wheat consumption rates for livestock as soaring wheat prices make corn a more attractive and affordable option for livestock feeders’ rations around the globe,” Holland provides. “Old crop wheat feed estimates were trimmed 4 million bushels, while 2021/22 projections were slashed 117 million bushels as exportable supplies around the world begin to dry up.”

Bar graph of global feed wheat usage 2012-21

Click here for a have a look at USDA’s August WASDE report in its entirety.

U.S. corn and soybean production comparison table

U.S. 2020/21 Ending stocks

 

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