USDA preview: US stocks slashed, but acreage boost redresses
Fastmarkets AgriCensus previews the United States Department of Agriculture’s (USDA) upcoming stock and planting updates for corn and soybeans.
What can we expect from the USDA’s updates for corn and soybean stocks and plantings? USDA updates will provide fresh data inputs with the start of another hotly contested US season.
With corn and soybean plantings wrapped up or in the final stretch, the focus is again turning to weather as well as the assumptions made around planting and use – key factors that will frame price movements and volatility in the next few weeks.
After a scintillating year for both corn and soybeans - underpinned by seismic Chinese demand, particularly for corn - ending stock outlooks have taken a battering and much now depends on maintaining a strong production outlook for the twin US staples.
Hopes now, on balance, appear to hinge on strong planting increases overcoming a substantial cut to 2020-21 ending stock outlooks while the marketing year grinds to a close.
For corn, prices at multi-year highs and expectations that China will continue to buy in bulk come at a time when the sustainable fuel sector has been given a new lease on life.
Powering back into full production after pandemic lockdowns, the US ethanol sector has ramped up its corn consumption on route to regaining daily pre-pandemic production rates of more than 1 million barrels per day.
Alongside that, mounting expectations for the biodiesel space have also driven domestic ambitions in the soybean space, leading to a trade-off between the two giants of US agriculture.
Where typically one’s strength favors planting over the other, with both beans and corn posting high prices, farmers could have limited scope to tease land from one to the other.
Starting with stock levels, the USDA’s quarterly report delivered slender stock projections for corn, wheat and soybeans at the March update, but the pace of exports since then has led to expectations that outlooks will be brutally slashed.
For corn, the biggest mover, stocks are expected to be cut to slightly more than 4 billion bushels (101.6 million tonnes) from 7.7 billion bushels last March. This will mark the lowest stock level in seven years, when the Midwest was dealing with the after-effects of one of its worst droughts on record.
For soybeans, the cut is marginally bigger on a percentage basis than corn, with analysts expecting stocks to fall to 771 million bushels from 1.5 billion bushels last March.
Wheat stocks, meanwhile, are expected total 844 million bushels, down from 1.3 billion bushels last March.
But the 2021-22 planted area has raised the most questions, with the USDA surprising with a relatively small 91.1 million acres for corn when it revealed its first snapshot of farmer planting intentions earlier this year.
Despite some expecting high prices to stimulate further corn plantings, the strength of beans and the presence of dry conditions have reined in outlooks that called for up to 96 million acres to be planted for the grain at one point.
On average, outlooks are calling for an increase, but by a more modest 2.26 million acres to 93.4 million acres.
Alongside that, the 87.6 million acres postulated by the USDA is likely to be pushed modestly higher, with analysts expecting a 1.24-million-acre increase to 88.84 million acres.
If realiaed, the combined area of US beans and corn will set new records of 182.2 million acres.
“A real concern I have is that we have never planted more than 180.3 million combined corn and soybean acres ever. So there isn’t much room for additional acres,” Advance Trading’s Larry Shonkwiler told AgriCensus.
Alongside that, China’s appetite for US wheat and sorghum provides another layer of strong buying interest, but wheat is expected to have suffered in some of the recent dry conditions.
On balance, analysts are looking for the USDA’s projection to be reined in marginally - by some 110,000 acres - to 46.24 million acres.
This article was first published to agricensus.com on June 25.