USDA-WASDE FORECAST #620 JANUARY 12th 2021

01/13/2022

OVERVIEW

The January 2022 WASDE projected the 2022 growing season with minor changes in acreage and yield and hence harvests of corn and soybeans compared to 2021. The USDA ERS adjusted the projected ending stocks of corn, soybeans and soybean meal upwards from the December 2021 report. The area of corn harvested was projected to be 85.4 million acres. Soybeans will be harvested from 86.3 million acres.

 

The January 2022 WASDE initial estimate of corn yield was retained at 177.0 bushels per acre, based on the corn harvest of 2021, (175.8 bushels per acre in 2020). The estimate of soybean yield was raised to 51.4 bushels per acre based on a yield of 51.2 bushels per acre in 2021 (50.7 bushels per acre in 2020).

 

The January 2022 USDA projection for the ending stock of corn was raised to 1,540 million bushels. Predicting supply and exports, USDA raised the projection of ending stock for soybeans to 350 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with fluctuation in exports. China only places orders in accordance with their needs and central Government policy rather than compliance with the Phase-One trade agreement of February 2020. The January 2022 WASDE projection retained the price of corn at $5.45 per bushel. The projection of price for soybeans was raised to 1,260 cents per bushel. Soybean Meal was raised $40 per ton to $370.

 

It is accepted that projections are based on the reality that China sharply increased purchases of commodities during the recently concluded market year partly to cover low stock caused by drought, and COVID-related disruptions in imports during the first quarter of 2020. China booked substantial orders for corn and soybeans from September 2020 onwards for the 2020-2021market year but is moderating orders now for the current market year. Reports on volumes of commodities exported to China and other nations are included in weekly editions of EGG-NEWS as USDA data is released.

 

CORN

The projected corn harvest for 2022 is 15,115 million bushels. The projected 2022 harvest of 15,115 million bushels can be compared to 14,507 million bushels in 2020. If farmers maintain application rates of far more expensive fertilizer to maximize yields the projected 2022 harvest will be 0.2 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was unchanged from the December report at 5,650 million bushels. The “Ethanol and Byproducts” category was raised 1.4 percent to 5,325 million bushels consistent with current domestic demand for E-10 and other blends following relaxation of COVID-19 restrictions. Projected corn exports were lowered 3.0 percent to 2,425 million bushels despite recent shipments to China and Mexico. Ending stocks were increased 3.1 percent to a projection of 1,540 million bushels.

The forecast USDA farm price for corn was unchanged at 545 cents per bushel. At 10H00 on January 13th on the day after release of the WASDE the CME quotation for March corn was at 592 cents per bushel, up 1.4 percent from the quotation on December 9th for December delivery and currently 8.6 percent above the USDA projection.

 

JANUARY 2022 WASDE #620 PROJECTIONS FOR THE 2022 CORN HARVEST:

Harvest Area

85.4 m acres

(93.4 m. acres planted, harvest corresponding to 91.4% of acres harvested)

Yield

177.0 bushels per acre

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

Beginning Stocks

1,235 m. bushels

 

Production

15,115 m. bushels

 

Imports

25 m. bushels

 

Total Supply

16,375 m. bushels

Proportion of Supply

Feed & Residual

5,650 m. bushels

34.5%

Food & Seed

1,435 m bushels

8.8%

Ethanol & Byproducts

5,325 m. bushels

32.5%

Domestic Use

12,410 m. bushels

75.8%

Exports

2,425 m. bushels

14.8%

Ending Stocks

1,540 m. bushels

9.4%

Ending Stock-to-domestic use proportion

12.4%

(Was 12.1 % in the December 2021 WASDE Report)

1 metric ton = 39.368 bushels

Average Farm Price: $5.45 per bushel. (Unchanged since the October 2021 WASDE Report)

 

SOYBEANS and SOYBEAN MEAL

USDA raised the projection for the 2022 soybean crop to 4,435 million bushels based on an estimated yield of 51.4 bushels per acre. With respect to use parameters, crushings were retained at 2,190 million tons. Projected exports were held at 2,050 million bushels, consistent with lower orders from China for the 2021-2022 market year. This is attributed to current requirements for imported ingredient for animal feed and the reality that traders in China prefer to order on a stable or declining market unless faced with shortages. From early October 2020 to the present, prices increased in response to bookings for the 2020-2021 market year. 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 raised 4.1 percent from the December 2021 report to 1,260 cents per bushel. At 10H00 on January 13th a day following release of the WASDE, the CME quotation for March 2021 delivery was 1,377 cents per bushel, up 117 cents or 9.3 percent higher compared to the December 9 th 2021 quotation for December delivery and 9.3 percent above the January USDA-WASDE projection for 2021/2022.

 

JANUARY 2022 WASDE #620 PROJECTION FOR THE 2022 SOYBEAN HARVEST:-

Harvest Area

86.3 m acres

(87.2 m. acres planted, harvest corresponding to 99.0% of planted acreage)

Yield

51.4 bushels per acre

(Was 51.2 bushels per acre in the December WASDE)

Beginning Stocks

257 m. bushels

(Was 175 million bushels in the December WASDE)

Production

4,435 m. bushels

 

Imports

15 m. bushels

 

Total Supply

4,707 m. bushels

Proportion of Supply

Crushings

2,190 m. bushels

46.5%

Exports

2,050 m. bushels

43.6%

Seed

101 m. bushels

2.2%

Residual

16 m. bushels

0.3%

Total Use

4,357 m. bushels

92.6%

Ending Stocks

350 m. bushels

7.4%

(Up 10 million bushels from the Dec. 2021 WASDE)

1 metric ton = 76.34 bushels

Average Farm Price: 1,260 cents per bushel (Up 50 cents from the December 2021 WASDE Reports)

The projected supply of soybean meal was reduced to 51.5 million tons based on current production driven by domestic and export demand and higher prices for soy oil. Domestic use was unchanged at 37.9 million tons. Exports were reduced to 14.0 million tons. The USDA raised the projected ex plant price of soybean meal by $40 per ton from the December report to $370 per ton. At 10H00 on January 9th the CME quotation for March 2022 delivery of soybean meal was $406, up $38 per ton or 10.3 percent compared to the December 9th CME quotation and 9.7 percent above the January USDA-WASDE projection for 2021.

 

JANUARY 2022 WASDE #620 PROJECTION OF SOYABEAN MEAL PRODUCTION AND USE

Beginning Stocks

0.341 m. tons

Production

51.509 m. tons

Imports

0.450 m. tons

Total Supply

52.300 m. tons

Domestic Use

37.900 m. tons

Exports

14.000 m. tons

Total Use

51.900 m. tons

Ending Stocks

0.400 m. tons

m. = million

Average Price ex plant : $370 (Up $40 per ton from the December 2021 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 0.44 cent per dozen
    • The cost of broiler production would change by 0.25 cent per live pound.

 

WORLD SITUATION

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

 

CORN AND COARSE GRAINS

“Global coarse grain production for 2021/22 is forecast 1.6 million tons lower to 1,500.1 million. This month’s foreign coarse grain outlook is for lower production, consumption, and stocks. Foreign corn production is forecast lower with declines for Brazil, Argentina, Kenya, Mexico, the EU, and Paraguay that are partially offset by an increase for Ukraine. For Argentina, dryness during December reduces yield prospects for early-planted corn in key central growing areas, although with an increase in late-planted corn area for much of the crop the critical phase of the growing season lies in the months ahead. Brazil is lowered reflecting reduced yield expectations for first-crop corn in southern Brazil. Other major coarse grain production changes include updated barley, sorghum, and millet production for China based on the latest information from the Rural Statistical Yearbook.

 

Major global coarse grain trade changes for 2021/22 include greater corn exports for Ukraine, Pakistan, and Tanzania with a reduction for Paraguay. For 2020/21, Argentina and Brazil’s exports for the marketing year beginning in March 2021 are raised based on observed shipments to date. For 2021/22, corn imports are raised for Kenya, Brazil, Canada, and Mexico, but lowered for Bangladesh. Barley imports are raised for Iran but lowered for Saudi Arabia. Foreign corn ending stocks are lower, mostly reflecting reductions for Brazil, Argentina, and Pakistan. Global corn stocks, at 303.1 million tons, are down 2.5 million”.

 

OILSEEDS

“The 2021/22 global soybean outlook includes lower production, crush, exports, and stocks. Foreign soybean production is lowered 9.5 million tons on reduced crops for Brazil, Argentina, and Paraguay. Brazil’s soybean crop is lowered 5 million tons to 139 million, reflecting dry weather conditions in December and early January in southern Brazil. Argentina’s crop is reduced 3 million tons to 46.5 million on both a lower area and yield, resulting in lower crush and exports of meal and oil. Paraguay’s crop is lowered 1.5 million tons to 8.5 million leading to lower exports mainly to neighboring countries. Global soybean stocks are reduced 6.8 million tons to 95.2 million on lower stocks for Brazil and Argentina. Other notable oilseed changes include lower palm oil production for Malaysia and higher rapeseed production for India on a faster-than-expected planting pace”.

 

Updated World production 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

1.500*

619

 

Supply

1.822

733

 

World Trade

253

194

 

Use

1.494

526

 

Ending Stocks

328

107

 

*Values rounded to million metric ton

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






































































































































































































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