USDA Report & The Heat Goes On
Update for June 11th, 2021
The USDA report yesterday included only minor adjustments. Corn exports showed a 75 million bushel increase, corn used for ethanol was also raised by 75 million bushels, which in turn lowered the U.S. 20/21 projected carryout by 150 million bushels. Brazilian corn production was lowered from 102 to 98.5 MMT, an adjustment that was clearly anticipated due to the extremely dry conditions that have persisted throughout this Safrinha growing season. Soybean numbers were disappointing but not surprising given recent soy crush numbers. The USDA reduced their 2020/21 projected domestic crush by 15 million bushels down to 2.175 billion bushels. Soybean oil exports were lowered by 400 million pounds but that was slightly offset by domestic usage which was raised by 225 million pounds. Global ending stocks for 2021/22 were increased by 1.5 MMT to 92.6 MMT due to higher beginning stocks in both the U.S. and Brazil and the 1.0 MMT increase made to Brazil’s 2020/21 soybean production total.
We’ve been hearing various predictions for months now but in less than 3 weeks we will get a look at the USDA Acreage report for 2021. The reductions in ending stocks that were made in yesterday’s report are likely to be of less significance after this report on June 30th as acreage numbers are expected to climb. The argument for trendline yields and overall production will be a heated debate going forward though as - where are these additional corn acres planted and what kind of growing conditions are present in these areas. These factors will greatly determine final production numbers. The USDA has begun to lower their corn production totals for Brazil’s Safrinha crop but many analysts feel that the adjustments so far are not nearly enough. CONAB (Brazil’s USDA) made a significant 10 MMT reduction to their May corn production estimate lowering the outlook from 106.4 MMT down to 96.4 MMT.
As you can see from both the corn and soybean maps shown below, weather forecasts will be vitally important during the next 30 to 45 days so prepare yourself for extreme market volatility.
Tyler Stafslien a farmer from Makoti, North Dakota says he counts the time since his last measurable rain in months not weeks. He told DTN, “The last real rain I got on my farm was in August 2020”. Stafslien’s farms sit within the epicenter of the devastating drought that has been intensifying across the Northern Plains taking a toll on the crops and the farmers involved for the past year. Farmers and agronomists told DTN that the yield potential is “roasting away the yield potential of one of the most diverse crop areas in the country”. Jason Hanson, an independent crop consultant located in Webster, North Dakota said, “When you go into a field and look back at the rows perpendicularly, you see how big the gaps are, for every crop. Canola, barley, corn, soybeans, edible beans, field peas, fava beans- it’s all the same.” Since this article ran most of North Dakota has received measurable rainfall, but as we know one rain helps but it does rectify this devastating situation.
Tom Vilsack, U.S. Secretary of Agriculture said some time ago that contrary to other reports, he had been assured by his Mexican counterpart that GMO corn from the U.S. would continue to be allowed. But Reuters has learned that the head of Mexico’s main farm lobby group says that the government intends to apply a GMO ban to grain used in animal feed. In an interview the National Farm Council President Juan Cortina expressed concern that currently there are hundreds of agricultural product import permits awaiting an answer and at least 8 are for genetically modified corn. Cortina pointed out that the ban is not set to go into effect for 3 years but, “They’re not giving us extensions, there haven’t been any administrative changes, they just don’t respond”. If the ban on GMO corn actually occurs it would dramatically alter the multibillion-dollar trade we rely on between the U.S. and Mexico, ending the yearly U.S. export of 16 million tonnes of corn.
The newest GFS model from this morning offers some hope for precipitation across most of the U.S. Corn Belt during the next 2 weeks. The map shows the predicted totals for the period running through June 25th.
The NOAA map below illustrates the total expected precipitation through next week.
NOAA’s 6–10-day outlook shows the persistence of above-normal temps and below normal precipitation.