Share via Email


* Email To: (Separate multiple addresses with a semicolon)
* Your Name:
* Email From: (Your IP Address is 44.200.175.255)
* Email Subject: (personalize your message)


Email Content:

USDA-WASDE FORECAST #626 July 12th 2022

07/12/2022

OVERVIEW

In a preamble to the May WASDE Report the USDA cautioned that events in Eastern Europe following the invasion of Ukraine by the Russian Federation would have unpredictable consequences. It is evident that the 2022 harvest of all crops in that nation will be seriously reduced and that Black Sea shipping continues to be disrupted. This situation has no short-term prospect of resolution.

 

The July 12th 2022 WASDE adjusted corn and soybean data from June for the 2022 season consistent with planting commencing at the end of April with delays in the major production areas due to inclement weather. The July WASDE projections of the acreages of corn and soybeans to be planted were updated from the Prospective Planting Report released on March 31st. This incorrectly suggested a four percent reduction in corn acreage and a corresponding increase in the area planted to soybeans. In reality corn was planted on 89.9 million acres and soybeans on 88.3 million acres.

 

The July 2022 WASDE initial estimate of corn yield was retained at 177.0 bushels per acre, despite the delay in planting as compared to 175.8 bushels per acre in 2021. The estimate of soybean yield was held at 51.5 bushels per acre compared to 51.2 bushels per acre in 2021.

 

The July 2022 USDA projection for the ending stock of corn was raised to 1,470 million bushels assuming predetermined production level, domestic use and exports. The USDA lowered the projected ending stock for soybeans from 280 million bushels in the June report to 230 million bushels. The ending stocks for corn and soybeans will be revised in the August WASDE in the light of crop progress and exports as influenced by geopolitical events.

 

The July 2022 WASDE projection adjusted the price of corn down 1.5 percent to $6.65 per bushel. The projected price for soybeans was reduced 2.0 percent to 1440 cents per bushel. Soybean Meal was lowered by 2.5 percent to $390 per ton. All three of the price projections deviate from the July 12th CME quotations for July delivery.

 

Projections included in the July 2022 WASDE reports reflect the known impact of the invasion of the Ukraine. It is evident that production and hence exports of wheat, corn and sunflower by Ukraine will be sharply reduced compared to recent annual averages. It is accepted that USDA projections for export are also based on the perceived intentions and needs of China. This Nation has sharply curtailed purchases of commodities during the current market year despite drought and COVID-related disruption of imports during the first quarter of 2021.

 

Reports on volumes of commodities exported are included in weekly editions of EGG-NEWS based on USDA data.

CORN

Based on known 2022 planting and emergence data the projected corn harvest for 2022 was raised 0.3 percent to 14,505 million bushels compared to 15,062 million bushels in 2021. If farmers maintain application rates of more expensive fertilizer to maximize yields the projected 2022 harvest will be 4.2 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was held at 5,350 million bushels. The “Ethanol and Byproducts” category was unchanged at 5,375 million bushels despite increased domestic demand for E-10 and other blends following relaxation of COVID-19 restrictions. Projected corn exports were held at 2,400 million bushels based on recent and projected shipments to China and Mexico and taking into account the anticipated availability from Eastern Europe. Ending stocks were 5.0 percent higher than in the June WASDE to 1,470 million bushels.

 

The forecast USDA farm price for corn was lowered to 665 cents per bushel. At close of trading on July 12th after release of the WASDE the CME quotation for July delivery was at 733 cents per bushel, down 5.2 percent from the quotation on June 10th for June delivery and currently 9.3 percent above the July USDA projection.

 

JULY 2022 WASDE #626 PROJECTIONS FOR THE 2022 CORN HARVEST:

Harvest Area

81.9 m acres

(89.9 m. acres planted, harvest corresponding to 91.1% of acres harvested)

Yield

177.0 bushels per acre

(was 177 bushels per acre since the December WASDE.)

Beginning Stocks

1,510 m. bushels

Production

14,505 m. bushels

Imports

25 m. bushels

Total Supply

16,040 m. bushels

Proportion of Supply

Feed & Residual

5,350 m. bushels

33.4%

Food & Seed

1,445 m bushels

 9.0%

Ethanol & Byproducts

5,375 m. bushels

33.5%

Domestic Use

12,170 m. bushels

75.9%

Exports

2,400 m. bushels

15.0%

Ending Stocks

1,470 m. bushels

 9.1 %

Ending Stock-to-domestic use ratio

12.0%

(Was 11.5 % in the June 2022 WASDE Report)

1 metric ton = 39.368 bushels

Average Farm Price: 665 cents per bushel. (Down 10 cents per bushel from June WASDE Report)

 

SOYBEANS and SOYBEAN MEAL.

Based on established planting and emergence data the USDA lowered the projection for the 2022 soybean crop by 2.9 percent to 4,505 million bushels with an estimated yield of 51.5 bushels per acre. With respect to use parameters, crushings were reduced to 2,245 million bushels with exports lower to 2,135 million bushels. This is despite concerns over availability of oilseeds from Eastern Europe and the drought in Brazil and Argentina. There is speculation over orders from China for the 2021-2022 market year. This is attributed to presumed reduced requirements for imported ingredients required for animal feed and the reality that traders in China are obligated to order on a stable or declining market unless faced with shortages. Prior to 2018, China, our largest trading partner for agricultural commodities imported the equivalent of 25 percent of U.S. soybeans harvested. Ending stocks were held at 340 million bushels.

 

The USDA projection for the ex-farm price for soybeans for the 2022 harvest was 2.0 percent lower from the June WASDE Report to 1,440 cents per bushel. At close of trading on July 12th following release of the WASDE, the CME quotation for July 2022 delivery was 1,593 cents per bushel, down 155 cents or 8.9 percent lower compared to the June 10th 2021 quotation for June delivery and 9.6 percent higher than the July USDA-WASDE projection of 1,440 cents per bushel for 2021/2022.

 

JULY 2022 WASDE #626 PROJECTION FOR THE 2022 SOYBEAN HARVEST:-

Harvest Area

87.5 m acres

(88.3 m. acres planted, harvest corresponding to 99.1% of planted acreage)

Yield

51.5 bushels per acre

(Was 51.4 bushels per acre in the April WASDE)

Beginning Stocks

215 m. bushels

(Was 205 million bushels in the June WASDE)

Production

4,505 m. bushels

Imports

15 m. bushels

Total Supply

4,735 m. bushels

Proportion of Supply

Crushings

2,245 m. bushels

47.3%

Exports

2,135 m. bushels

45.1%

Seed

102 m. bushels

 2.2%

Residual

23 m. bushels

0.5%

Total Use

4,505 m. bushels

95.1%

Ending Stocks

230 m. bushels

4.9%

(Down 50 million bushels from the June 2022 WASDE)

1 metric ton = 76.34 bushels

Average Farm Price: 1,440 cents per bushel (Down 30 cents from the June 2022 WASDE Report)

 

The projected supply of soybean meal was reduced from June to 52.850 million tons consistent with current production driven by lower domestic and export demand and lower prices for soy oil. Domestic use was raised 0.5 percent to 39.2 million tons. Exports were down 2.9 percent to 14.0 million tons. The USDA reduced the ex plant price of soybean meal by $10 to $390 per ton. At close of trading on July 12th the CME quotation for July 2022 delivery of soybean meal was $478 per ton, up 11.2 percent or $48 per ton percent compared to the June 10th CME quotation and 22.6 percent above the July USDA-WASDE projection for 2022.

 

JULY 2022 WASDE #626 PROJECTION OF SOYBEAN MEAL PRODUCTION AND USE

Beginning Stocks

0.400 m. tons

Production

52.850 m. tons

Imports

0.450 m. tons

Total Supply

53.700 m. tons

Domestic Use

39.200 m. tons

Exports

14.000 m. tons

Total Use

53.200 m. tons

Ending Stocks

0.500 m. tons

  1. = million

Average Price ex plant:$390 per ton (Down $10 per ton from the June 2022 WASDE Report)

 

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest increasing production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic yield, use and exports.

 

  • For each 10 cents per bushel change in corn:-
  • The cost of egg production would change by 0.45 cent per dozen
  • The cost of broiler production would change by 0.25 cent per live pound
  • For each $10 per ton change in the cost of soybean meal:-
  • The cost of egg production would change by 0.35 cent per dozen
  • The cost of broiler production would change by 0.30 cent per live pound.

 

WORLD SITUATION

With respect to world coarse grains and oilseeds the July WASDE Report included the following appraisals by USDA:-

 

“This month’s 2022/23 foreign coarse grain outlook is for lower production and use, and larger stocks relative to last month. Foreign corn production is down, with reductions for Russia, the EU, and Kenya partially offset by an increase for Paraguay. Russia corn production is lowered reflecting a cut in area. EU corn production is reduced with a forecast decline for Italy. For 2021/22, corn production is raised for Paraguay with increases to both area and yield. Foreign barley production for 2022/23 is lowered with reductions for Canada and the EU”.

 

“Major global trade changes for 2022/23 include larger corn exports for Paraguay with a reduction for Russia. Corn imports are raised for Zimbabwe. Barley exports are lowered for Canada and the EU. Foreign corn ending stocks are up marginally relative to last month. Global corn stocks, at 313.0 million tons, are up 2.5 million tons relative to last month”.

 

OILSEEDS:

“The 2022/23 global oilseed supply and demand forecasts include lower production, lower exports, higher crush, and lower ending stocks compared to last month. Global oilseed production is reduced 3.7 million tons to 643.1 million on lower soybean, rapeseed, cottonseed, and peanut production with higher sunflower seed production partly offsetting. Soybean production is lowered for Canada based on the latest plantings report from Statistics Canada. European Union rapeseed production is lowered 0.4 million tons to 17.9 million based on continued dry conditions especially in France and Germany. Russian sunflower seed production is increased 1.0 million tons to 15.5 million, mainly on higher area shown in government planting progress reports”.

 

“The 2022/23 global soybean ending stocks are reduced slightly to 99.6 million tons as higher stocks for Argentina are more than offset by lower stocks for the United States, Brazil, and China. Notable changes for 2021/22 include reduced soybean crush and imports for China, and increased soybean production, imports, crush, and ending stocks for Argentina”.

 

Updated World production, including the U.S. and use of total grains and oilseeds is summarized for the 2020/2021 season taking into account Northern and Southern Hemisphere production:-

 

Factor: billion m. tons

Coarse Grains

Oilseeds

Output

1.477*

643

Supply

1.816

751

World Trade

227

195

Use

1.478

529

Ending Stocks

338

119

*Values rounded to million metric ton

(1 metric ton corn= 40 bushels) (“ton” represents 2,000 pounds)