Allendale's Rich Nelson Says USDA Leaves Corn Production Estimates Unchanged & Shows a Big Increase in Wheat Production Numbers On Latest WASDE ReportThu, 10 Jun 2021 14:46:17 CDT
USDA held pat on projected corn production for the 2021-22 crop at 14.99 billion bushels (bb) but lowered the carryover from the old-crop ending stocks as USDA increased 75 million bushels (mb) for the 2020-21 corn demand.
Old-crop ending stocks were lowered 150 mb to 1.107 bb. On another supply front, USDA also lowered Brazil's 2020-21 production 3.5 million metric tons (mmt) to 98.5 mmt (3.877 bb).
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-- World Agricultural Supply and Demand Estimates (WASDE):
Associate Farm Director, KC Sheperd spoke with Allendales Rich Nelson and he said that USDA left corn production estimates unchanged. " As far as the corn discussion we did see USDA cut or cut ending stocks from 1.257 billion bushels, in this case now we're down to 1.1 billion bushels."
Nelson said that was a little bit of a surprise. He said those prices are strong, "Strong corn for ethanol, strong exports recognized, and we actually agree with their numbers all across the board on the old crop numbers. Keep in mind for new crop though, you know, we're still looking at, acres, we're still looking at yield changes, and we're still looking at the demand side and troublingly Low estimates for USDA from for corn."
To hear more from Allendale's Rich Nelson on the current WASDE numbers, click or tap below.
For the 2020-21 old-crop corn, USDA raised demand for ethanol by 75 mb to 5.05 bb and raised export demand by 75 mb as well, bringing exports to 2.85 bb. That raised total use for the old crop to 15.02 bb, and lowered old-crop ending stocks and carryover. The old-crop ending stocks was lowered 150 mb to 1.107 bb, which came in lower than the average pre-report estimate.
In the 2021-22 new crop, USDA forecasts total production at 14.99 bb. Yield is projected at 179.5 bushels per acre, which would be a record, leaving production forecast the same as the May report.
While total supply was lowered 150 mb due to the shorter carryover, USDA held firm on other supply-and-demand numbers for June.
USDA 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 bb for the year. Exports for the 2021-22 crop are forecast at 2.45 bb.
Total use for the crop is 14.765 bb. That puts projected ending stocks for the 2021-22 crop at 1.357 bb, which comes in lower than the pre-report average. The stocks-to-use ratio for corn came in at 9.19%.
The average farm gate price for the 2021-22 crop is forecast at $5.70 a bushel, also the same as May.
Globally, eyes remain on Brazil's 2020-21 corn production as USDA lowered Brazil's corn production to 98.5 mmt, (3.877 bb), down from 102 mmt (4.0 bb) last month and reflecting a continued trajectory downward.
Brazil's CONAB on Thursday also projected Brazil would harvest 96.4 mmt (3.8 billion bushels). In May, CONAB had projected a 106.4 mmt (4.19 bb) corn crop.
For 2020-21, USDA also raised global beginning stocks to 305.45 mmt, but lowered production by 3.43 mmt to 1,125.03 mmt. Exports globally were forecast was raised slightly to 187.04 mmt as well. Global ending stocks were lowered 2.93 mmt to 280.60 mmt.
USDA increased its old-crop (2020-21) ending stocks estimate by 15 mb to 135 mb, due to a decrease in crush. USDA said the change reflects lower domestic soybean meal disappearance and higher soybean meal imports. It made no other changes to use.
As a result, beginning stocks for the new-crop (2021-22) marketing year increased by 15 mb. USDA made no changes to production, leaving its yield and acreage forecasts unchanged at 50.8 bushels per acre and 87.6 million acres, respectively. It made no changes to new-crop demand, resulting in an increased ending stocks forecast of 155 mb.
USDA left the national average farm gate price unchanged at $13.85 per bushel.
Globally, USDA sees 2021-22 ending stocks at 92.55 mmt, up 1.45 mmt from last month's estimate. The change also reflects revisions to old-crop ending stocks, which were also increased by 1.45 mmt. Much of that change came from an increase in Brazilian production.
Brazil's soybean production in 2020-21 increased 1 mmt to 137 mmt, mainly on higher yields in Mato Grosso do Sul. Argentina production was left unchanged at 47 mmt. USDA made no changes to 2021-22 production, leaving Brazil's forecast at 144 mmt and Argentina's at 52 mmt.
USDA pegged all wheat production for the 2021-22 crop at 1.898 bb, up 26 mb from the May report but within pre-report analyst estimates. They also bumped up the average overall expected yield, to 50.7 bushels per acre, up from 50 bushels per acre in May.
Winter wheat production for 2021-22 is forecast at 1.31 bb, up 2% from May and up 12% from last year. The winter wheat average overall yield is expected to hit 53.2 bushels per acre, up 1.1 bushels from May and up 2.3 bushels from last year's crop. Hard red winter wheat production is projected at 771 mb, up 6% from last month. Soft red winter is estimated at 335 mb, up 1% from May. USDA put white winter wheat production at 202 mb, down 8% from May. Of that category, 15.4 mb are expected to be hard white wheat, with 187 bushels coming from soft white wheat varieties.
For the 2021-22 wheat crop, USDA pegged domestic ending stocks at 770 mb, down 4 mb from the May report. That drop is based largely on lower beginning stocks, after USDA bumped old-crop (2020-21) wheat exports up by 20 mb, which trimmed old-crop ending stocks to 852 mb. That, plus a 10-mb increase in feed and residual use offset the increased production estimate and led to the slightly lower new-crop ending stocks.
USDA left farm-gate new-crop wheat prices at $6.50 per bushels, the same as the May estimate, and up $1.45 from old-crop wheat's average price.
Globally, USDA pegged new-crop (2021-22) wheat ending stocks at 296.80 mmt, up 1.8 mmt from the May estimate, but within pre-report analyst expectations. Global new-crop production also edged up by almost 5.5 mmt, to 794.44 mmt, based on favorable conditions in Europe and Russia. Global consumption is also up 2.4 mmt, to a record 791.12 mmt, based mostly on increased feed and residual use by the EU and Russia.
Thursday's WASDE report came with some surprises for the livestock sector. Beef production was increased by 5 million pounds, hog production fell by 30 million pounds and total red meat production fell by 26 million pounds. When understanding these month-to-month changes, it's imperative that one understands the fundamental dashboard that these individual markets are trenching through. It may seem strange to see total beef production higher, given than the 2020 calf crop was smaller and that processing speeds have been running far below adequate levels, but with the onset of severe drought, this added production largely comes from cow slaughter. In respect to the hog market, demand continues to pull hogs closer to the knife as packers can't keep up with domestic and international demand. With that being the case, packers are having to pull lighter weight hogs to fill commitments and this affects overall tonnage with their lighter weights.
Projected steer prices for the second quarter gained $2.00 to $120.00, steer prices in the third quarter gained $1.00 to $115.00, and the fourth quarter remained steady at $120.00. These quarterly increased pushed the annual projected steer prices to average $117.00, which is $0.70 more than last month's projection of $116.30.
Barrow and gilt prices for the second quarter gained $2.00 to $81.00, hog prices for the third quarter jumped $4.00 to $78.00, and the market's biggest advancement was actually seen in the fourth quarter projected price, which saw an increase of $6.00 to $66.00. These quarterly advancements pushed the annual projected barrow and gilt prices to average $70.20, which is a stout $3.00 more than last month's projection of $67.20.
Beef imports grew by 60 million pounds, while beef exports for the year grew by 115 million pounds. Pork imports fell by 30 million pounds, but pork exports grew by 125 million pounds. The stronger export figures in both pork and beef meat supplies helps add to the point that prices could be stronger later this year.
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