OVERVIEW

The USDA projected values for the production of corn and soybeans in the May #636 edition of the WASDE to reflect proposed 2023 new crop values. These were presumably based on planting intentions, long-term projections of U.S. weather influenced by a transition to an El Nino, carry forward levels from 2022, export projections and ending stocks.

With respect to the World situation it is evident that the 2023 harvest of all crops in Ukraine, a major World supplier, will be reduced by at least one third compared with pre-invasion values. The situation in Ukraine has no short-term prospect for resolution despite initiation of ocean shipments through the Black Sea Grain Initiative. The intermediate-term prospect for this export route is questionable. Even if the agreement is extended, shipments will be subject to frequent obstruction by the Russian Federation.

The May 2023 WASDE projected corn and soybean harvest data for the 2023 season, with corn harvested from 84.1 million acres and soybeans from 86.7 million acres.

The May 2023 WASDE value for corn yield was projected at 181.5 bushels per acre. By comparison yield was 173.3 bushels per acre in 2022. The estimate of soybean yield was raised to 52.0 bushels per acre compared to 49.5 bushels per acre in 2022.

The May 2023 USDA projection for corn imports was 25 million bushels. The ending stock of corn was predicted to attain 2,222 million bushels despite higher exports during the new season. The USDA projected ending stock of soybeans at 325 million bushels due to increased crushing and lower exports.

The May 2023 WASDE projected the price of corn at $4.80 per bushel for the new crop. The projected price for soybeans was 1,210 cents per bushel. Soybean Meal was lower at $365 per ton. The USDA price projections for soybeans and soybean meal deviated widely as expected from the May 12^th CME quotations for May delivery of corn and soybean meal respectively.

Projections included in the May 2023 WASDE report reflect the most recent estimates of commodity production in the Southern Hemisphere. Economists also evaluated the likely impacts of the invasion of Ukraine by the Russian Federation with occupation of 20 percent of the Nation’s land area and following extensive destruction of infrastructure. It is evident that production and hence exports of wheat, corn and sunflower from Ukraine will be sharply reduced compared to recent annual averages. Compliance with the Black Sea agreement is in question notwithstanding a nominal 60-day extension in Mid-March.

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 taking into effect relaxation of COVID restrictions on consumer and demand.

Reports on volumes of commodities exported are included in weekly editions of EGG-NEWS is derived from published USDA data.

CORN

Based on yield and acreage projections the corn harvest for 2022 was estimated at 15,265 million bushels compared to 13,730 million bushels in 2022. The U.S. 2023 harvest is projected to be 0.8 percent higher than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was projected at 5,650 million bushels, up 7.1 percent. The “Ethanol and Byproducts” Category will be 1.0 percent higher than for the 2022 crop to 5,300 million bushels consistent with estimated demand for E-10 and other blends. Gasoline consumption is restrained by prevailing high prices, general inflation and changes in commuting patterns persisting from COVID restrictions. Projected corn exports were raised 13.5 percent to 2,100 million bushels, based on recent orders, the volume of projected shipments to China and Mexico and taking into account the anticipated lower availability of coarse grains from Eastern Europe and drought in Argentine. Ending stocks in the May WASDE were projected at 2,222 million bushels up 65.6 percent from the 2022 crop.

The forecast USDA farm price for corn in the May 2023 WASDE Report for the new crop was 480 cents per bushel. At 13H00 on May 12^th after release of the WASDE the CME quotation for May delivery was 634 cents per bushel, down 3.9 percent from the quotation on April 11^th for April delivery and 32.1 percent below the May USDA projection.

May 2023 WASDE #636 PROJECTIONS FOR THE 2023 CORN HARVEST:

1 metric ton = 39.368 bushels

Average Farm Price: 480 cents per bushel. (Down 180 cents per bushel from the April WASDE Report reflecting the old crop)

SOYBEANS and SOYBEAN MEAL.

Based on actual harvest data the USDA projected the 2023 soybean crop at 4,510 million bushels with an estimated yield of 52.0 bushels per acre from 86.7 million acres. Crush volume at 2,310 million bushels will be 4.1 percent higher in 2023 but projected exports of 1,975 million bushels were 2.0 percent down from the April WASDE reflecting the old crop. Ending stocks were projected to be 335 million bushels from the April WASDE for the old crop.

There is uncertainty over orders from China for the 2022-2023 market year. This is attributed to a presumption of lower requirements for animal feed despite relaxation of previous strict COVID restrictions. In reality traders in China are obligated to order on a stable or declining market unless faced with shortages. Prior to 2018, China, the largest trading partner for U.S. agricultural commodities, imported the equivalent of 25 percent of U.S. soybeans harvested.

The USDA May 2023 projection for the ex-farm price for soybeans for the 2023 harvest was 1,210 cents per bushel. At 13H00 on May 12^th following release of the WASDE, the CME quotation for May 2023 delivery was 1,435 cents per bushel, down 3.5 percent compared to the April 11^th quotation for April delivery and 18.4 percent lower than the May 2023 WASDE projection of 1,210 cents per bushel.

May 2023 WASDE #636 PROJECTION FOR THE 2023 SOYBEAN HARVEST:-

1 metric ton = 76.34 bushels

Average Farm Price: 1,210 cents per bushel (Down from 1,430 cents per bushel in the April 2023 WASDE Report)

The projected production of soybean meal from the 2023 crop will be 54.38 million tons, up 3.6 percent consistent with a 4.0 percent increased crush of 2,310 million bushels of soybeans. Production is driven both by exports and domestic consumption for livestock feed and for soy oil supplying the food and biodiesel segments. The projection of domestic use was raised 3.6 percent to 40.81 million tons. Exports were raised 8.0 percent to 14.8 million tons. Ending stock was lowered to 400,000 tons. The USDA reduced the ex plant price of soybean meal to $365 per ton for the 2023 season based on supply to demand considerations reflected in a 60 percent increase in ending stock.

At 13H00 on May 12^th the CME quotation for May 2023 delivery of soybean meal was $427 per ton, down 6.2 percent compared to the April 11^th CME quotation and $100 per ton or 21.5 percent lower than the May 2023 WASDE projection of $465 per ton.

MAY 2023 WASDE #636 PROJECTION OF SOYBEAN MEAL PRODUCTION AND USE

(Quantities in thousand short tons)

Average Price ex plant:$365 per ton (Down $100 per ton from the April 2023 WASDE Report reflecting the 2023 season)

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 doze
• 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 March WASDE Report included the following appraisals by USDA:-

COARSE GRAINS:

“The global coarse grain outlook for 2023/24 is for record production and use, and larger ending stocks. World corn production is forecast record high, with the largest increases for the United States, Argentina, the EU, China, and Serbia. Partly offsetting are smaller crops projected for Ukraine and Brazil. World corn use is expected to rise about four percent, with foreign consumption increasing by a similar amount. With lower prices, world corn imports are forecast to grow just over five percent, driven by increases for several countries, including China, Egypt, Vietnam, Algeria, Mexico, and Colombia. Partly offsetting are reductions for the EU and Turkey. Global corn ending stocks are up 15.5 million tons to 312.9 million, mostly reflecting larger stocks for the United States that are partly offset by declines for Brazil and China”.

“For China, total coarse grain imports for 2023/24 are forecast at 38.4 million tons, up 7.2 million from a year ago but below the record 50.5 million reached during 2020/21. Expectations are for China’s internal market prices for energy feedstuffs to remain higher than the world market. Corn imports are expected to rise 5.0 million tons to 23.0 million supported by imports from three major exporting countries: the United States, Brazil, and Ukraine. China’s barley imports are projected at 7.0 million tons and sorghum at 8.0 million.

OILSEEDS:

“The 2023/24 global oilseed outlook shows higher production, crush, and ending stocks compared with last marketing year. Global production is rising 43.8 million tons to 671.2 million mainly on higher soybean production for South America and the United States, higher sunflower seed for the EU, and higher rapeseed for the EU and Canada. Partly offsetting is lower rapeseed production for Australia on a lower yield after 3 years of exceptional weather conditions. Combined production for major South American producers (Brazil, Argentina, Paraguay, and Uruguay) is growing 31.9 million tons after last year’s drought in southern South America and a higher expected area”.

“Global 2023/24 oilseed crush is growing 20.7 million tons to 542.5 million, with most of the growth in soybean crush for Argentina, China, Brazil, and the United States. Soybean products account for the majority of the growth in oilseed meal and vegetable oil trade, counter to last marketing year when lower Argentine supplies depressed soybean product exports and were replaced by palm oil and sunflower seed and rapeseed products”.

“The growth in global oilseed trade is slower than the prior decade, increasing less than one percent in 2023/24 as higher soybean exports are mostly offset by lower rapeseed and sunflowerseed shipments. Trade is limited by higher oilseed production in major importing countries and lower production in major exporters of rapeseed. For the EU, higher oilseed production drives lower import demand of sunflowerseed, rapeseed, soybeans, and products. Larger soybean crush for China also reduces demand for rapeseed and products. Rapeseed production in major exporters, particularly Australia and Ukraine, is also down”.

“Global 2023/24 soybean trade is growing 4.0 million tons to 172.4 million, reflecting increased demand by China and higher imports for Pakistan, Egypt, and Bangladesh after last marketing year’s declines. China’s imports are rising 2.0 million tons to 100.0 million, a slower rate than the prior decade. With projected weaker growth for China and EU soybean imports, coupled with record South American supplies, the U.S. share of global exports is expected to decline”.

*Values rounded to billion metric ton

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