The U.S. Department of Agriculture on Wednesday, May 12, released its monthly World Agricultural Supply and Demand Estimates report. The May report included not only the use and ending stock estimates for the 2020-21 crops, or "old crop," but also the first breakdown of projected supplies and demand for the 2021-22 "new crop" corn and soybeans that farmers are currently planting.
USDA lowered corn ending stocks for the 2020-21 crop by 95 million bushels, to 1.257 billion bushels, in the May report, reflecting 100 million bushels increase in export demand. John Heinberg with Total Farm Marketing said, however, the market has been trading like the old crop stocks are already below 1 billion bushels.
“I think the corn market acts like we are around 800 (million bushels) for stocks, and end users like ethanol plants have been scrambling, which has been reflected with cash basis levels remaining on fire,” he said.
For the new crop, USDA pegged corn production at 14.99 billion bushels based on a 179.5 bushel per acre yield and the 91.1 million acreage projection from the USDA Prospective Plantings Report. That put new crop ending stocks at 1.507 billion bushels, which was above expectations. That number could change going forward, though, as Heinberg believes corn acreage may be adjusted higher in the June 30 Acreage Report. However, he added that USDA has not factored in the continuation of drought conditions in the western Corn Belt with its yield forecast.
The corn market was also watching the production estimates out of South America, in particular Brazil, which has been experiencing drought amid its second crop season. USDA lowered production 5 million metric tons, to 102 million metric tons, but there are many private estimates in Brazil that are below 100 million metric tons, some as low as 90 million metric tons. World corn ending stocks for the 2020-21 crop were at 284 million metric tons, which was nearly unchanged from April, while the new crop stocks came in at 292.3 million metric tons, which was nearly 8 million metric tons above the average trade expectations.
USDA sees tight soybean stocks continuing into the 2021-22 crop year. The agency left old-crop stocks unchanged at 120 million bushels, while providing only a slight increase to the new-crop balance sheet at 140 million bushels. Heinberg said that equates to a historically low 2.6 stocks-to-use ratio for soybeans, with the new-crop ratio at only 3.2. New crop production came in close to estimates at 4.405 billion bushels with a yield of 50.8 bushels per acre and acreage of 86.7 million. He said that could change going forward with an acreage adjustment at the end of June and again depending on weather.
Heinberg said old-crop soybean prices are at levels not seen since the drought in 2012 and, at this rate, could easily eclipse those prices with the end-user demand pushing cash basis levels to record levels as well. Processors are scrambling for the last remaining bushels of soybeans before the next crop comes to market.
World soybean ending stocks for 2020-21 came in as expected and close to last month at 87 million metric tons, while new-crop was above estimates at 91.1 million metric tons. Brazil soybean production was unchanged from last month, while Argentina soybean production was lowered 500,000 metric tons, to 47 million metric tons.
U.S. wheat production was pegged at 1.872 billion bushels, while winter wheat was above expectations at 1.283 billion bushels. Old-crop ending stocks were 20 million bushels above last month at 872 million bushels, while new-crop was higher than expected at 774 million bushels. World ending stocks were close to April on the old-crop offering at 295 million metric tons, but below trade guesses for the 2021-22 crop at 295 million metric tons.