USDA on Tuesday released its January Crop Production, World Agricultural Supply and Demand Estimates (WASDE), Quarterly Stocks and Winter Wheat Seedings reports.
USDA lowered soybean ending stocks to 140 million bushels (mb), a 35 mb decline that was within the range of pre-report expectations. The agency increased its export forecast by 30 mb and its crush estimate by 5 mb to result in the lower ending stocks figure.
USDA also surprisingly lowered the 2020-21 corn crop yield 3.8 bushels per acre (bpa) to 172 bpa. That dropped production 325 mb, which also lowered corn ending stocks for the crop as well.
According to DTN Lead Analyst Todd Hultman, Tuesday’s new U.S. ending stocks estimates were bullish for corn and wheat, neutral in terms of expectations for soybeans, while the world ending stocks estimates were neutral for corn, soybeans and wheat.
Hultman pegged Tuesday’s Grain Stocks report as bullish for corn, and neutral for soybeans and wheat.
Check this page throughout the morning for important highlights from the reports and commentary from our analysts on what the numbers mean.
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- Crop Production, Quarterly Stocks and Winter Wheat Seedings: here.
- World Agricultural Supply and Demand Estimates (WASDE): here.
USDA lowered soybean production in its annual Crop Production estimates to 4.135 billion bushels (bb), a 35 mb decline from previous estimates. The national average yield was pegged at 50.2 bpa, .5 bpa lower than last month. USDA said it made the largest reduction in Minnesota, Iowa and Kansas. Harvest area increased slightly to 82.3 million acres.
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After reducing production, USDA increased its forecast for imports by 20 mb, offsetting some of the decline in supply. It raised crush estimates by 5 mb and export estimates by 30 mb. The agency left seed use unchanged but lowered its residual estimate by 13 mb. Ending stocks, as a result, came in at 140 mb for the 2020-21 season.
The national average farm gate price increased by 20 cents to $11.15 per bushel.
Globally, ending stocks also inched down to 84.31 million metric tons (mmt), a 1.33 mmt decline that was within the range of pre-report estimates. USDA lowered Argentina’s production by 2 mmt to 48 mmt. Brazil’s estimate was unchanged at 133 mmt. The reduction in South America was mostly offset by a 2.1 mmt increase in China’s anticipated production, based on recent data from that county.
USDA surprising lowered the yield on the 2020-21 corn crop by 3.8 bpa to 172 bpa. That dropped production by 325 mb to 14.182 bb, which fell outside of the lower pre-report estimates by analysts.
The pre-report analysts’ average had projected USDA lowering production 73 mb.
USDA also lowered the old-crop carryover by 76 mb as well to 1.919 bb.
The combined lower carry in combined with lower yields dropped total supply for the 2020-21 corn crop by 400 mb to 16.127 bb.
On the demand side, USDA lowered feed and residual use by 50 mb to 5.650 billion bushels. USDA also lowered ethanol use by 100 mb as well to 4.95 bb.
In a surprise as well, USDA also lowered corn exports for the 2020-21 crop by 100 mb to 2.55 bb.
Total usage was lowered 250 mb to 14.575 bb. That put ending stocks at 1.552 bb, down from 1.7 bb in the December WASDE forecast. The stocks-to-use ratio for the corn crop is forecast at 10.6%, down from 11.48% in December.
The average farm price for the 2020-21 corn crop was posted at $4.20 a bushel, up 20 cents from December.
Globally USDA lowered global production 9.67 million metric tons (mmt), leading to 2.44 mmt lower global exports as well. Global ending stocks were lowered 5.13 mmt to 283.83 mmt.
Global production was lowered in Argentina by 1.5 mmt to 47.5 mmt and Brazil’s production was lowered 1 mmt to 109 mmt. U.S. production was lowered 8.24 mmt to 360.25 mmt.
USDA increased its forecast for China’s imports by 1 mmt to 17.5 mmt.
USDA left U.S. wheat production at 1.826 bb, unchanged from the December report. The agency increased domestic use significantly, upping feed and residual use by 25 mb and seed use by 1 mb, based on lower-than-expected second quarter stocks and increased planted wheat area.
Those adjustments dropped wheat ending stocks below pre-report analyst expectations, to 836 mb, down from 862 mb in December, and well below last year’s ending stocks of 1.028 bb.
The agency bumped up wheat’s average farmgate price 15 cents to $4.85 per bushel.
Globally, USDA trimmed wheat production slightly, down to 772.64 mmt. Argentina’s production was trimmed by 0.5 mmt, down to 17.5 mmt, which, if realized, would be the country’s smallest crop in five years.
Global consumptions were increased 1.76 mmt to 759.54 mmt, based on higher feed and residual use for China, the U.S. and Russia. As a result, global ending stocks were dropped to 313.19 mmt, on the low end of pre-report analyst estimates.
Beef production for 2020 was reduced by 80 million pounds, while pork production was reduced 40 million pounds for the same period. The reduction in production moved expected production levels to 27.1 billion pounds of beef and 28.3 billion pounds of pork.
Beef production is expected to continue to slip lower in the latest annual 2021 production estimate at 27.1 billion pounds through the year, a 70-million-pound reduction from December estimates.
Pork production in 2021 is expected to post a slight gain, increasing 55 million pounds from the December estimate to 28.5 billion pounds. January estimates for steer prices through the 2021 year increased 50 cents per cwt to $115.50 per cwt, shifting nearly $7 per cwt higher than the estimated 2020 level of $108.51 per cwt.
Barrow and Gilt prices also posted a positive boost in the January estimate, focusing on the reduced production levels and strong demand through the remainder of 2021. Exports for pork were slightly reduced in the January report for 2020, falling 10 million pounds, and more aggressively lowered for 2021, falling 175 million pounds from the December estimate.
Beef exports continue to remain steady to slightly higher then December estimates, but not likely enough to aggressively impact long-term price moves.
Beef demand per capita has continued to see slight reductions in both 2020 and 2021 projections, while pork demand per capita remains generally unchanged from previous estimates.
The report is expected to be seen generally neutral in all meat sectors, with the most significant impact to the market expected to be delayed until the third or fourth quarter of 2021.
Corn stock totaled 11.3 bb as of Dec. 1, slightly less than last year but near the average pre-report estimate. USDA said 7.05 bb were stored on the farm, while 4.28 bb were stores in off-farm locations. Disappearance, or usage, in the September to November timeframe, totaled 4.78 bb compared to 4.51 bb in the same period last year.
There were 2.93 bb of soybeans on hand as of Dec. 1, 10% less than last year. On-farm stocks totaled 1.31 bb, down 14% from a year ago. Off-farm stocks, at 1.62 bb, are down 6% from last December. Usage totaled 1.73 bb, which is up 43% from last year.
All wheat stores in all positions totaled 1.67 bb, down 9% from last year. Farmers held 483 mb on-farm, while the rest, 1.19 bb, is stored in off-farm locations. Those numbers are down 7% and 10% from last year respectively. At 484 mb, disappearance was 4% less than the same period last year.
WINTER WHEAT AND CANOLA SEEDINGS
USDA reports that farmers planted 32 million acres of winter wheat for the 2020-21 growing season, up 5% from last year, when planted acreage dropped to 30.4 million acres, its lowest level since 1909.
Hard red winter acres are expected to reach 22.3 million acres, up 4% from last year. Acreage is up from last year across most of the growing region, with the largest increases expected in Kansas, Montana and North Dakota, and the largest decreases in Nebraska and Texas.
Soft red winter acres were pegged at 6.23 million acres, up 12% from last year. Compared with last year, the largest acreage increases are expected in Indiana, Missouri, Tennessee and Wisconsin, while the largest acreage decreases are expected in Georgia, Maryland and Ohio.
White winter wheat acres are expected to reach 3.48 million acres, down 1% from last year.
Canola acres in Kansas and Oklahoma were pegged at a combined 22,000 acres, up 29%, or 5,000 acres.
|U.S. PRODUCTION (Million Bushels) 2020-21|
|WINTER WHEAT ACREAGE (million acres) 2021-22|
|QUARTERLY STOCKS (million bushels)|
|U.S. ENDING STOCKS (Million Bushels) 2020-21|
|WORLD ENDING STOCKS (million metric tons) 2020-21|