USDA-WASDE FORECAST #624 May 12th 2022

05/12/2022

OVERVIEW

Egg-News

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 harvests will be seriously reduced and that Black Sea shipping is disrupted.

 

The May 12th 2022 WASDE changed corn and soybean data for the 2022 growing season consistent with planting commencing at the beginning of the present month with delays in the major production areas due to inclement weather. Projections of the acreages of corn and soybeans to be planted were updated from the April report to conform to the Prospective Planting Report released on March 31st. This showed a four percent reduction in corn acreage and a corresponding increase in the area planted to soybeans. Corn yield was unchanged from April but soybean yield was increased fractionally.

 

The USDA ERS lowered the projected ending stock for corn consistent with the reduced acreage planted. Ending stocks for soybeans were increased in response to the proportional extent of planting. The area of corn to be harvested in 2022 was projected to be 81.7 million acres. Soybean acreage was increased to 90.1 million acres. The respective acreages will be subject to revision depending on the situation in Ukraine, relative CME prices for corn and soybeans and predicted production margins as influenced by costs of fertilizer and fuel that are increasing rapidly. The June WASDE will confirm the respective acreages planted to the major crops.

 

The May 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 raised to 51.5 bushels per acre compared to 51.2 bushels per acre in 2021.

 

Egg-News

The May 2022 USDA projection for the ending stock of corn was reduced to 1,360 million bushels assuming predetermined production level, domestic use and exports. The USDA raised the projected ending stock for soybeans from 260 million bushels in April to 310 million bushels. The ending stocks for corn and soybeans will be revised in the June WASDE in the light of more accurate projections of acreage planted, emergence and exports as influenced by geopolitical events.

 

The May 2022 WASDE projection raised the price of corn to $6.75 per bushel. The projected price for soybeans was adjusted upwards to 1440 cents per bushel. Soybean Meal was lowered to $400 per ton. All three of the price projections deviate from the May 12th CME quotations for May delivery.

 

Projections included in the May 2022 WASDE were developed before the full impact of the invasion of the Ukraine can be evaluated. It is evident that production and hence exports of wheat, corn and sunflower seed by Ukraine will be sharply reduced compared to recent annual averages. This will have implications for current U.S planting intentions with respect to crop selection and acreage. 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 March 2022 planting intentions the projected corn harvest for 2022 was reduced to 1,440 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 4.6 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was lowered by 275 million bushels from April to 5,350 million bushels. The “Ethanol and Byproducts” category was unchanged at 5,375 million bushels consistent with stable domestic demand for E-10 and other blends following relaxation of COVID-19 restrictions. Projected corn exports were lowered to 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 5.9 percent lower than in the April WASDE to 1,360 million bushels.

 

The forecast USDA farm price for corn was raised 16.3 percent to 675 cents per bushel. At 14H00 on May 12th after release of the WASDE the CME quotation for May delivery was at 814 cents per bushel, up 6.0 percent from the quotation on April 8th for April delivery and currently 20.6 percent above the April USDA projection.

MAY 2022 WASDE #624 PROJECTIONS FOR THE 2022 CORN HARVEST:

 

Harvest Area

81.7 m acres

(89.5 m. acres planted, harvest corresponding to 91.3% of acres harvested)

Yield

177.0 bushels per acre1

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

Beginning Stocks

1,440 m. bushels

Production

14,460 m. bushels

Imports

25 m. bushels

Total Supply

15,925 m. bushels

Proportion of Supply

Feed & Residual

5,350m. bushels

33.6%

Food & Seed

1,440 m bushels

 9.0%

Ethanol & Byproducts

5,375 m. bushels

33.8%

Domestic Use

12,165 m. bushels

76.4%

Exports

2,400 m. bushels

15.1%

Ending Stocks

1,360 m. bushels

 8.5 %

Ending Stock-to-supply use ratio

8.5%

(Was 8.8 % in the April 2022 WASDE Report)

1 metric ton = 39.368 bushels

NOTE 1. No allowance for late planting in 2022

 

Average Farm Price: 675 cents per bushel. (Up 95 cents per bushel from the April WASDE Report)

 

SOYBEANS and SOYBEAN MEAL.

 

Based on March 2022 planting intentions the USDA increased the projection for the 2022 soybean crop to 4,640 million bushels with an estimated yield of 51.5 bushels per acre. With respect to use parameters, crushings were increased 1.8 percent to 2,255 million tons. Projected exports were raised 4.0 percent to 2,200 million bushels, due to 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 for animal feed and the reality that traders in China are obligated 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 2020-2021market 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 8.7 percent from the April WASDE Report to 1,440 cents per bushel. At 14H00 on May 12th following release of the WASDE, the CME quotation for May 2022 delivery was 1,662 cents per bushel, down 27 cents or 1.6 percent lower compared to the April 8th 2021 quotation for April delivery and 13.3 percent below the May USDA-WASDE projection for 2021/2022.

 

MAY 2022 WASDE #624 PROJECTION FOR THE 2022 SOYBEAN HARVEST:-

Harvest Area

90.1 m acres

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

Yield

51.5 bushels per acre

(Was 51.4 bushels per acre in the April WASDE)

Beginning Stocks

235 m. bushels

(Was 175 million bushels in the December WASDE)

Production

4,640 m. bushels

Imports

15 m. bushels

Total Supply

4,890 m. bushels

Proportion of Supply

Crushings

2,255 m. bushels

46.1%

Exports

2,200 m. bushels

45.0%

Seed

102 m. bushels

 2.1%

Residual

23 m. bushels

0.5%

Total Use

4,580 m. bushels

93.7%

Ending Stocks

310 m. bushels

6.3%

(Up 50 million bushels from the April 2022 WASDE)

1 metric ton = 76.34 bushels

 

Average Farm Price: 1,440 cents per bushel (Up 115 cents from the April 2022 WASDE Report)

 

The projected supply of soybean meal was raised 2.3 percent to 53.05 million tons despite current production driven by domestic and export demand and higher prices for soy oil. Domestic use was raised to 39.0 million tons. Exports were projected 1.4 percent higher to 14.4 million tons. The USDA lowered the projected ex plant price of soybean meal to $400 per ton. At 14H00 on May 12th the CME quotation for May 2022 delivery of soybean meal was $397 per ton, down $72 per ton or 15.4 percent compared to the April 8th CME quotation and 0.8 percent below the May USDA-WASDE projection for 2022.

 

MAY 2022 WASDE #624 PROJECTION OF SOYABEAN MEAL PRODUCTION AND USE

Beginning Stocks

0.400 m. tons

Production

53.050 m. tons

Imports

0.450 m. tons

Total Supply

53.900 m. tons

Domestic Use

39.000 m. tons

Exports

14.400 m. tons

Total Use

53.400 m. tons

Ending Stocks

0.400 m. tons

  1. = million

 

Average Price ex plant:$400 (Down $20 per ton from the April 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 May WASDE Report included the following appraisals by USDA:-

 

COARSE GRAINS:

“The global coarse grain outlook for 2022/23 is for lower production and use, and smaller ending stocks. World corn production is forecast to decline from last year’s record high, mostly reflecting reductions for Ukraine, the United States, the EU, and China that are partially offset by increases for Brazil, Argentina, Serbia, and South Africa. World corn use is expected to decline 1.2 percent, with foreign consumption down 0.9 percent. World corn imports are projected to fall 2.3 percent, with the largest year-over-year declines for China, Canada, the EU, Brazil, and the United Kingdom. Notable increases in corn imports include Vietnam, Iran, and Bangladesh. Global corn ending stocks are down 1.4 percent to 305.1 million tons, mostly reflecting expected declines for China and the United States that are partially offset by increases for Brazil, Serbia, and Ukraine.”

 

“For China, total coarse grain imports for 2022/23 are forecast at 37.9 million tons, down 5.0 million from a year ago and below the record 50.5 million reached during 2020/21. China’s internal market prices for energy feedstuffs remain higher than the world market, despite a surge in prices among major exporting countries. Corn imports are expected to decline 5.0 million tons to 18.0 million with a decline in imports from Ukraine. Barley imports are projected at 10.0 million tons and sorghum at 9.5 million”.

 

OILSEEDS:

“Global oilseed production for 2022/23 is projected at 647.1 million tons, rising 50.3 million from last marketing year when droughts impacted South American soybean production and the Canadian canola crop. Global soybean production is forecast up 45.3 million tons to 394.7 million, with Brazil accounting for over half of the increase, up 24 million tons to a record 149 million. Argentina’s soybean crop is expected to reach 51 million tons and Paraguay 10 million. Partly offsetting higher global soybean and canola production is lower oilseed production for Ukraine”.

 

“Global protein meal consumption is expected to grow 3 percent in 2022/23, recovering from slow growth in the past two marketing years. Nearly half of the gains are in China where soybean crush is forecast to increase 6 million tons from 2021/22 to 95 million. Exportable supplies of oilseed meals and oils are expected to recover, with higher 2022/23 crush for Canada and South America, which offset declines in sunflower products out of Ukraine. Further, palm oil exports are expected to increase for Indonesia after slower-than-normal shipments and export restrictions in the prior marketing year”.

 

“Global 2022/23 soybean exports are expected to increase 9 percent to 170.0 million tons after last year’s drought-related declines in South America. China accounts for about half of the trade growth, with 2022/23 imports rising 7 million tons to 99 million. Global soybean ending stocks are projected at 99.6 million tons, up 14.4 million, with most of the increase in Brazil, Argentina, and the United States. Other notable soybean changes include back year revisions to China’s domestic consumption growth to better reflect per capita consumption and population growth. Soybean imports for China in 2021/22 are raised 1 million tons to 92 million. Global 2021/22 ending stocks are lowered with lower Chinese stocks, a reduction in Argentina’s soybean production, and lower U.S. stocks”.

 

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

1.475*

647

Supply

1.810

750

World Trade

228

196

Use

1.480

528

Ending Stocks

334

119

*Values rounded to million metric ton

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






































































































































































































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