Even with a higher old-crop carryover, USDA on Friday found lowered corn production and maintained demand for the 2020-21 corn crop, leading to a forecast of lower ending stocks for the crop.
USDA on Friday released the July report for the World Agricultural Supply and Demand Estimates (WASDE) as well as the Crop Production report.
For corn, USDA bumped up the carryover into 2020-21 by 145 million bushels (mb) while lowering production with fewer acres to 15 billion bushels (bb) even. That led to a decline in ending stocks at 2.648 bb, slightly lower than the average pre-report estimate.
You can access the full reports here:
— Crop Production: https://www.nass.usda.gov/…
— World Agricultural Supply and Demand Estimates (WASDE): http://www.usda.gov/…
Keeping with the June Acreage report, USDA pegged corn acreage to 92 million acres but maintained the yield at 178.5 bushels per acre (bpa), pegging crop production at 15 bb, down from 995 mb from the June estimate.
The pre-report analyst average pegged crop production at 15.06 bb.
Ending stocks for the 2020-21 crop were pegged at 2.648 bb, down from 3.23 bb in the June report. The pre-report average for ending stocks was forecast at 2.73 bb.
Corn exports remained at 2.15 bb, the same as June. Feed and residual demand was projected at 5.85 bb, down from 6.05 bb in June. Ethanol demand remained steady, projected at 5.2 bb.
Total demand for the 2020-21 crop was forecast at 14.625 bb. With lower ending stocks at 2.648 bb, that put the stocks-to-use ratio for the 2020-21 crop at 18.1%.
The average farm-gate price was projected at $3.35 per bushel, a 15-cent bump from the June report.
Globally, corn production for the 2019-20 crop year for Brazil was forecast at 101 million metric tons (3.97 bb) and Argentina’s crop was pegged at 50 mmt (1.97 bb).
Looking ahead, USA lowered global beginning stocks for the 2020-21 crop year to 311.95 mmt, down 960,000 metric tons from the June report. Production was also lowered global production 25.27 mmt to 1,163.21 mmt. With demand and use holding steady, that leads to the 2020-21 global ending stocks being lowered to 315.04 mmt, down 22.83 mmt from June.
For the 2020-21 marketing year, U.S. soybean ending stocks are forecast at 425 mb, an increase of 30 mb from the USDA’s June estimate. The agency made no changes to the new-crop demand estimates, rather attribute to the change to higher supplies.
USDA increased its production forecast to 4.14 bb, incorporating its higher forecast for soybean acreage. USDA also increased its beginning stocks estimate.
On the old-crop balance sheet, USDA’s forecast for ending stocks increased 35 mb to 620 mb, toward the high side of pre-report estimates. USDA reduced residual usage for soybeans by 50 mb, which it says reflects the recent Grain Stocks report and reported soybean usage through May.
The season average farm gate price for 2020-21 increased $0.30 from last month to $8.50 per bushel.
Globally, new-crop ending stocks declined by 1.26 mmt to 95.1 mmt, below the average trade estimate. USDA said it expects lower production globally along with a slowdown in exports and increase in crush.
For 2019-20 crop year, global ending stocks totaled 99.67 mmt. The 2019-20 Brazilian production estimate was increased by 2 mmt to 126 mmt while the Argentine production estimate was left unchanged at 50 mmt.
USDA raised old-crop ending stocks 61 mb to 1.04 bb. Wheat production for 2020-21 was lowered 53 mb to 1.824 bb.
Food demand for the 2020-21 crop held steady at 964 mb, but USDA lowered feed and residual use 10 mb to 90 mb. That brought down total domestic use 10 mb to 1.115 bb. The export forecast remained the same at 950 mb.
Ending stocks for the 2020-21 crop were increased to 942 mb in the report, up from 925 million bushels last month.
The average farm-gate price for the 2020-21 crop remained at $4.60 a bushel as well.
USDA is still forecasting another record world wheat crop for the 2020-21 marketing year — 769.3 mmt — although that forecast declined from last month. USDA expects European production to decline by 1.5 mmt, primarily due to reduction in France and Spain. Russia production was cut by 500,000 metric tons while Morocco’s was slashed by 800,000 mt.
As a result, USDA forecast global ending stocks at 314.84 mmt, but remains a record-large number, with China and India holding 51% and 10% of the world’s stockpiles.
Beef production increased in the latest WASDE report, with expected production increasing to 7.02 billion pounds through the third quarter. This is up from a 6.9-billion-pound estimate in June.
The continued focus on short-term production through both third and fourth quarter will likely create additional price pressure through the end of the year.
Pork production also sparked strong gains following the expectation that increased hog supply numbers will be seen through most of the year based on plant production challenges through the early half of 2020. Pork production in the third quarter is expected to be at 7.3 billion pounds, up 310 million pounds from the June report.
Beef and pork demand is expected to see additional firmness as the focus on reduced wholesale and retail prices through the summer months is starting to create additional demand support through the entire market. Projected beef demand for 2020 is expected to be 27.1 billion pounds, while pork demand for the year is expected at 21.99 billion pounds.
|U.S. PRODUCTION (Million Bushels) 2020-21|
|U.S. AVERAGE YIELD (Bushels Per Acre) 2020-21 (WASDE)|
|U.S. ENDING STOCKS (Million Bushels) 2019-20|
|U.S. ENDING STOCKS (Million Bushels) 2020-21|
|WORLD ENDING STOCKS (Million metric tons) 2019-20|
|WORLD ENDING STOCKS (million metric tons) 2020-21|
|WORLD PRODUCTION (million metric tons) 2019-20|
|U.S. PRODUCTION (million bushels) 2020-21|