USDA-WASDE FORECAST #628 SEPTEMBER 12th 2022

09/12/2022

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. This observation is still relevant in September. It is evident that the 2022 harvest of all crops in that nation will be seriously reduced by hostilities despite potential for yield. Export of commodities including corn, wheat and oilseeds has resumed at a lower level than before the invasion but the Black Sea shipping agreement is fragile. It is doubtful whether Ukraine will be able to ship the remainder of the 2021 crop before the reduced 2022 harvest is transported to eastern ports still in operation. The situation in Ukraine has no short-term prospect for resolution.

 

The September 2022 WASDE adjusted corn and soybean data from August for the 2022 season is consistent with planting that commenced at the end of April with delays in the major production areas due to inclement weather. The September WASDE projections of the acreages of corn and soybeans planted were updated, with corn planted on 88.6 million acres and soybeans on 87.5 million acres.

 

The September 2022 WASDE advanced estimate of corn yield was lowered to 172.5 bushels per acre from 175.4 bushels per acre, due to the delay in planting followed by drought with extreme heat in July. Yield was 175.8 bushels per acre in 2021. The estimate of soybean yield was lowered to 50.5 bushels per acre from 51.9 bushels per acre in the August WASDE. Yield was 51.2 bushels per acre in 2021.

 

The September 2022 USDA projection for the ending stock of corn was lowered by 12.2 percent from 1,388 million bushels to 1,219 million bushels assuming predetermined production level, domestic use and exports. The USDA lowered the projected ending stock for soybeans by 13.4 percent from 245 million bushels in the August Report to 200 million bushels. The ending stocks for corn and soybeans will be revised in the October WASDE with the 2022 harvest in progress and greater clarity on exports and domestic use.

 

The September 2022 WASDE projection increased the price of corn from $6.65 to $6.75 per bushel. The projected price for soybeans was unchanged at 1,435 cents per bushel. Soybean Meal was unchanged at $390 per ton. All three of the price projections deviate from the September 12th CME quotations for current month delivery.

 

Projections included in the September 2022 WASDE reports reflect the most likely impacts 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, emergence and crop progress data the projected corn harvest for 2022 was reduced 2.9 percent to 13,944 million bushels compared to 15,062 million bushels in 2021. The U.S. 2022 harvest is projected to be 7.9 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was reduced by 100 million bushels to 5,225 million bushels. The “Ethanol and Byproducts” category was reduced by 50 million bushels to 5,325 million bushels consistent with domestic demand for E-10 and other blends following relaxation of COVID-19 restrictions but with reduced offtake due to an escalation in fuel cost. Projected corn exports were reduced by 100 million bushels to 2,275 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 12.2 percent lower than in the August WASDE to 1,219 million bushels.

 

The forecast USDA farm price for corn was raised 10 cents per bushel from the August WASDE Report to 675 cents per bushel. At close of trading on September 12th after release of the WASDE the CME quotation for September delivery was at 712 cents per bushel, up 12.0 percent from the quotation on August 12th for current month delivery and 5.5 percent above the September USDA projection.

 

SEPTEMBER 2022 WASDE #628 PROJECTIONS FOR THE 2022 CORN HARVEST:

Harvest Area

80.8 m acres

(88.6 m. acres planted, harvest corresponding to 91.2% of acres harvested)

Yield

172.5 bushels per acre

(was 175.4 bushels per acre in the August WASDE.)

Beginning Stocks

1,525 m. bushels

Production

13,944 m. bushels

Imports

25 m. bushels

Total Supply

15,494 m. bushels

Proportion of Supply

Feed & Residual

5,225 m. bushels

33.7%

Food & Seed

1,450 m bushels

 9.4%

Ethanol & Byproducts

5,325 m. bushels

34.3%

Domestic Use

12,000 m. bushels

77.4%

Exports

2,275 m. bushels

14.7%

Ending Stocks

1,219 m. bushels

 7.9 %

Ending Stock-to-domestic use ratio

10.2%

(Was 11.4 % in the August 2022 WASDE Report)

1 metric ton = 39.368 bushels

 

Average Farm Price: 675 cents per bushel. (Up 10 cents per bushel from the August WASDE Report)

 

SOYBEANS and SOYBEAN MEAL.

Based on confirmed planting and crop progress data the USDA lowered the projection for the 2022 soybean crop by 3.4 percent to 4,378 million bushels with an estimated yield of 50.5 bushels per acre. With respect to use parameters, crushings were reduced by 20 million bushels to 2,225 million bushels with exports 70 million bushels lower to 2,085 million bushels. This is despite concerns over availability of oilseeds from Eastern Europe and the drought in Brazil and Argentina that affected the 2021-2022 crop. There is speculation over the size of orders from China for the 2021-2022 market year. This uncertainty 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 lowered 18.4 percent or 45 million bushels to 200 million bushels from the August Report

 

The USDA September projection for the ex-farm price for soybeans for the 2022 harvest was unchanged from the August WASDE Report at 1,435 cents per bushel. At close of trading on August 12th following release of the WASDE, the CME quotation for September 2022 delivery was 1,550 cents per bushel, up 19 cents or 1.2 percent higher compared to the August 12th 2021 quotation for same month delivery and 115 cents per bushel or 8.0 percent higher than the September WASDE projection of 1,435 cents per bushel for 2021/2022.

 

SEPTEMBER 2022 WASDE #628 PROJECTION FOR THE 2022 SOYBEAN HARVEST:-

Harvest Area

86.6 m acres

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

Yield

50.5 bushels per acre

(Was 51.9 bushels per acre in the August WASDE)

Beginning Stocks

240 m. bushels

(Was 225 million bushels in the August WASDE)

Production

4,378 m. bushels

Imports

15 m. bushels

Total Supply

4,633 m. bushels

Proportion of Supply

Crushings

2,225 m. bushels

48.0%

Exports

2,085 m. bushels

45.0%

Seed

102 m. bushels

 2.2%

Residual

21 m. bushels

0.5%

Total Use

4,433 m. bushels

95.7%

Ending Stocks

200 m. bushels

4.3%

(Down 45 million bushels from the August 2022 WASDE)

1 metric ton = 76.34 bushels

 

Average Farm Price: 1,435 cents per bushel (Unchanged from the August 2022 WASDE Report)

 

The projected supply of soybean meal was reduced from August consistent with a 0.9 percent reduction in crushings to 52.350 million tons consistent with current production driven by export demand and domestic consumption for livestock and soy oil for food and biodiesel and. Domestic use was held at 39.2 million tons. Exports were reduced by 0.3 million tons to 13.7 million tons. The USDA held the ex plant price of soybean meal at $390 per ton. At close of trading on September12th the CME quotation for September 2022 delivery of soybean meal was $473 per ton, up 1.5 percent or $7 per ton percent compared to the September 12th CME quotation and 21.3 percent above the September WASDE projection 0f $390 per ton over 2022.

 

SEPTEMBER 2022 WASDE #628 PROJECTION OF SOYBEAN MEAL PRODUCTION AND USE

Beginning Stocks

0.400 m. tons

Production

52.350 m. tons

Imports

0.600 m. tons

Total Supply

53.350 m. tons

Domestic Use

39.200 m. tons

Exports

13.700 m. tons

Total Use

52.900 m. tons

Ending Stocks

0.450 m. tons

  1. = million
  2.  

Average Price ex plant:$390 per ton (Unchanged from the August 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 September WASDE Report included the following appraisals by USDA:-

 

COARSE GRAINS:

“This month’s 2022/23 foreign coarse grain outlook is for larger production, higher trade, and increased stocks relative to last month. Foreign corn production is forecast higher with increases for China, Ukraine, Canada, and Mozambique, more than offsetting reductions for the EU and Serbia. China corn production is raised as abundant rainfall in key Northeast provinces and the North China Plain boost yield prospects. Ukraine corn production is raised with an increase in yield expectations while Canada is higher based on greater indicated area. EU corn production is lowered based on reductions for France, Romania, and Germany. Foreign barley production is higher with larger production in Russia and Australia more than offsetting a decline for Syria”.

 

“Major global coarse grain trade changes for 2022/23 include larger corn exports for Ukraine but a reduction for the United States. Corn imports are lowered for Canada and Vietnam. Foreign corn ending stocks are raised 2.2 million tons to 273.6 million, mostly reflecting increases for China and India that are partially offset by declines for Ukraine, the EU, and Thailand. World corn ending stocks at 304.5 million tons, are down 2.2 million”.

 

OILSEEDS:

“Foreign 2022/23 oilseed production is increased 2.8 million tons to 516.3 million mainly on higher sunflower seed and soybean production for Ukraine and higher rapeseed production for Australia. Ukraine’s sunflower seed production is raised 1.0 million tons to 10.5 million due to favorable August rainfall. Ukraine’s soybean production is raised on higher area. Rapeseed production for Australia is raised on recent beneficial rainfall improving yield prospects. Higher exports of sunflower seed and rapeseed from Ukraine and Australia are in line with higher EU imports. EU soybean imports are lowered with higher supplies of other oilseeds. China soybean imports for 2022/23 are lowered 1.0 million tons to 97 million. Global soybean ending stocks at 98.9 million tons are down 2.5 million mainly on lower U.S. and China 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: Million m. tons

Coarse Grains

Oilseeds

Output

1,464*

645

Supply

1,802

753

World Trade

226

197

Use

1,473

532

Ending Stocks

330

119

*Values rounded to billion metric ton

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






































































































































































































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