May WASDE Ending Stock Estimates Bearish for Corn, Neutral for Soybeans and Bullish for WheatWed, 12 May 2021 14:45:41 CDT
USDA lowered corn ending stocks for the 2020-21 crop 95 million bushels (mb) to 1.257 billion bushels (bb) on Wednesday, coming in slightly below the pre-report average projections and reflecting higher export demand.
USDA sees tight soybean stocks continuing into the 2021-22 crop year. It left old-crop stocks unchanged at 120 mb, while providing only a meager increase to the new-crop situation at 140 mb.
USDA on Wednesday released its monthly World Agricultural Supply and Demand Estimates (WASDE) report. The May report included, not only the use and ending stock estimates for the 2020-21 crops (old crop), but also the first breakdown of projected supplies and demand for the 2021-22 new crops that farmers are just now putting into the fields for corn and soybeans.
According to DTN Lead Analyst Todd Hultman, Wednesday's new U.S. ending stocks estimates were bearish for corn, neutral for soybeans and wheat. Meanwhile, Hultman pegged the world ending stocks estimates as bearish for corn, neutral for soybeans and bullish for wheat.
(Click or Tap below to hear all of Todd's Analysis)
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For the 2020-21 corn crop, USDA raised exports 100 mb to 2.775 bb. USDA held pat on ethanol use at 4.975 billion bushels but lowered feed, residual and industrial use by 5 mb to 6.395 bb. That pushed total use for corn to 14.870 bb, up 95 mb from last month.
For 2020-21, the stocks-to-use ratio came in at 8.4%, down from 9.1% in the April projections.
For old-crop corn, USDA pegged the average farmgate price at $4.35 a bushel, up 5 cents from last month.
In the 2021-22 new crop, USDA forecasts total production at 14.99 bb and pegs total use at 14.765 bb. On the demand side, USDA has feed, seed and industrial use for the new crop at 6.615 bb and ethanol use at 5.2 bbfor the year. Exports for the 2021-22 crop are forecast at 2.45 bb.
That puts projected ending stocks for the 2021-22 crop at 1.507 bb, which comes in higher than the pre-report average.
The average farm gate price for the 2021-22 crop is forecast at $5.70 a bushel.
Globally, eyes remain on Brazil's 2020-21 corn production as USDA lowered Brazil's corn production to 102 million metric tons (mmt) (4.0 bb), down from 109 mmt (4.29 bb) last month. Brazil's crop forecasting agency Conab had dropped Brazil's corn production down to 106.4 mmt (4.19 bb) earlier on Wednesday.
For 2020-21, USDA also raised global beginning stocks to 304.48 mmt, but lowered production by 859,000 metric tons to 1,128.46 mmt. Exports globally were forecast was lowered to 186.81 mmt as well. Global ending stocks were lowered slightly to 283.53 mmt.
For the old-crop (2020-21) marketing year, USDA left ending stocks unchanged at 120 mb. It left demand categories unchanged from April, although it did increase the national average farm gate price by a dime to $11.25.
Also for old-crop, global soybean stocks were lowered by less than 1 mmt to 86.55 mmt. USDA left its Brazilian forecast unchanged at 136 mmt but lowered Argentina's estimate by .5 mmt to 47.0 mmt.
Looking at new-crop supplies for the 2021-22 marketing year, USDA sees lower beginning stocks, lower exports and higher crush, but only slightly higher ending stocks. USDA sees stocks coming in around 140 mb, within the range of pre-report estimates. The soybean crop is projected at 4.4. bb, using planted acreage of 87.6 million and a trendline yield estimate of 50.8 bushels per acre (bpa). Exports are forecast to drop 205 mb from the 2020-21 marketing year, while the crush forecast is 35 mb higher.
"With prices for fall delivery above $14.00 per bushel in some locations, the 2021-22 U.S. season-average soybean price is projected at $13.85 per bushel, up $2.60 from 2020-21," USDA stated.
Globally, USDA sees ending stocks in the 2021-22 marketing year climbing to 91.1 mmt on increased production. Brazilian farmers, who haven't planted this crop yet, are expected to raise another record at 144 mmt. Argentina's production is expected to rise 5 mmt to 52 mmt. While global exports are expected to grow, the U.S.'s share will likely be smaller, while Brazil's grows from 50% to 54% market share.
USDA pegged new-crop (2021-22) all wheat production at 1.872 bb, at an average yield of 50 bpa, right where pre-report analyst estimates expected it. Of that, USDA expects 1.28 bb to be winter wheat, also within analyst expectations, and up 10% from last year. Average winter wheat yields are expected to be 52.1 bpa, up 1.2 bpa from last year.
Hard red winter production for 2021-22 is projected at 731 mb, up 11% from last year. Soft red winter is pegged at 332 mb, up 25% from last year. White winter wheat is expected to reach 220 mb, down 10%.
As for domestic supply and demand for new-crop wheat, USDA sees users starting with 872 mb in beginning stocks from old-crop wheat and pegs imports at 125 mb, pushing total supply to 2.869 bb, slightly lower than last year. Between food, seed and residual, USDA pegged new-crop domestic use slightly up from last year at 1.195 bb. With exports trimmed slightly as well to 900 mb, that leaves the agency with new-crop ending stocks of 774 mb, well within pre-report expectations, but nearing the record low stocks number of 752 mb in 2014-15.
USDA pegged farm-gate new-crop wheat prices at $6.50 per bushel, a jump from old-crop wheat prices, which sat closer to $5 per bushel.
On the global stage, new-crop wheat production is projected to 788.98 mmt, a new record for world wheat production. Higher production for Argentina, the EU, UK, Morocco, Ukraine and the United States is expected to offset reductions in production from Australia and Canada. USDA pegged beginning stocks at 294.97 mmt, and imports were bumped up to 199.04 mmt, based mostly on increased demand from Algeria, Indonesia, the UE and Middle East region. USDA expects 158.68 mmt to go to feed, and 202.42 to go to exports, with Russian the leading exporter, at 40 mmt. That leaves new-crop wheat ending stocks up slightly to 294.96 mmt, with China accounting for 48% of the total.
In Wednesday's WASDE report, beef production for the year increased by 260 million pounds, while pork production for the year saw a 54 million pound decrease, but consequently when these factors were combined they pushed read meat supplies for 2021 to see a 209 million pound increase.
High beef production from both a fed and non-fed cattle basis pushed the market's projections higher while lighter carcass weights and limited supplies in the hog sector did the opposite.
Annual steer prices increased by $0.30 to average $116.30 throughout 2021. The highest two earning quarters for the steer market are the second and fourth quarters, where steer prices are projected to average $118.00 (second quarter) and $120.00 (fourth quarter). The third quarter lags behind the other two and is only projected to price steers at $114.00.
Barrow and gilt prices saw another increase for the year as the market is expected to average $1.70 higher annually and pushed the year's average to $67.20. The second quarter is forecasted to yield the highest price of $79.00, and from there the year's trajectory is expected to slightly decline as the third quarter averages $74.00 and the fourth quarter averages $60.0.
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