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USDA Report Worksheet and 2022 Soybean : Corn Ratio

Update for November 11th, 2021

We received the USDA November data this week much of which surprised the trade. The 2021 corn yield was raised to a new all-time record from the previous estimate of 176.5 bushels per acre up to 177 bushels per acre, which calculates to an increase of 43 million bushels in total production. But the estimated 50 million bushel increase in corn used for ethanol offsets the increase in total U.S. production. Exports and feed and residual numbers were left unchanged while the U.S. ending stocks were reduced by 7 million bushels from 1.5 billion down to 1.43 billion.

All-time record corn yields were found in California, Georgia, Idaho, Indiana, Kentucky, Michigan, New York, North Carolina, Ohio, Oklahoma and Pennsylvania.

The U.S. soybean market got a bullish surprise Tuesday when the USDA reported a decrease in soy yields from 51.5 bushels per acre a month ago and pre-report estimates of 51.9 fell to a surprising 51.2 bushels per acre. This latest estimate calculates to a significant 60 million fewer bushels of production than had been anticipated prior to the report. Soy exports were lowered by 40 million bushels, seed fell by 2 million bushels while crush numbers were left unchanged. These adjustments add up to a 20 million bushel increase of U.S. ending stocks, much less burdensome than many were expecting.

Several states saw record setting yields this season such as Illinois, Iowa, Kentucky, Mississippi, Nebraska, Ohio, Pennsylvania and Tennessee. States that received decrease in yield revisions from October were Indiana (down 3 bpa), Ohio (down 2 bpa), Iowa (down 1 bpa), and Louisiana (down 1 bpa).

Looking ahead to the 2022 acreage battle more analysts agree “that the corn balance sheets simply cannot tolerate an acreage loss next year. It is perhaps for this reason that corn has been so strong vs soybeans. Demand remains stout despite high prices”.

Ag Web asked a selection of market analysts what they anticipate for the U.S. 2022 growing season:

· Jon Scheve – Superior Feed Ingredients President of Grain expects that 80% of U.S. producers will not change their planting intentions for acres in 2022. Of the remaining 20% that may adjust their typical acreage rotation he expect most will only make changes on about 10% of their total acres, but those acres can add up. He looks for, “winter and spring wheat to each gain at least 1 million acres. Oats, cotton and sunflowers together could gain 1 million acres. Fertilizer prices have tripled from just over a year ago, but that doesn’t translate to less corn. The central Corn Belt will probably push for more corn acres. The eastern edge of the Corn Belt could see a big switch to soybeans as well as the non-irrigated areas in the western Corn Belt.”

· Joe Vaclavik – President of Standard Grain conducted a customer survey regarding their plans for 2022 acres. Based on those results from the survey “I anticipate only a marginal change versus 2021. I’d estimate 2022 U.S. corn acres at 92.3 million and soybean acres at 88.2 million. Fertilizer and input prices have been the big story in regard to a potential decline in corn acreage. In talking with customers, however, corn still pencils better than soybeans for many. Many have locked up fertilizer needs. Others do not stray from their rotation. Spring wheat and oats should gain some spring acres based on new-crop pricing. Cost of production is rising drastically across the board, which means elevated risk. Keep an eye on budgets, costs and manage accordingly.”

· Bill Biedermann – AgMarket.Net Hedging Strategist is looking back to 2007-08 which is the last time we saw a dramatic increase in fertilizer prices like we have now. He found “In 2008, corn acres lost 7.5 million and soybean acres jumped 10.9 million. If we simply take the 2008 acreage shift for face value, we have a problem. A decrease in corn acres typically creates an increase in yield, whereas an increase in soybean acres creates a sub-trend yield. When we put those numbers in a 2022 supply-and-demand matrix, corn ending stocks fall below pipeline requirements and soybeans ending stocks create a glut. Obviously, that will not happen, so what needs to change to prevent a large acreage shift? Price/. The soybean: corn ratio will need to move closer to 2.1 to shift acres.”

· Brian Grete, editor of Pro Farmer says the current prices favor corn over soybeans. “But given the surge in fertilizer prices and strong 2021 soybean yields, the ratio won’t be the best indicator of acres for 2022.”

The House Agriculture Committee held a hearing last week regarding the transportation issues that are slowing down the export of goods and commodities here in the U.S. and around the globe. One of the issues Gregg Doud, former U.S. chief of ag trade negotiator in the Trump administration says that he does not see the logistical issues getting resolved any time soon as ports are returning empty shipping containers back to China. Doud said, “right now the shipping industry has very clearly indicated they’d rather speed the process up and get those empty containers back to Asia first, without taking the time to reload them with some sort of agricultural commodity before you ship them back over. I don’t think there’s any question in my mind, at least that at this point, that’s having an impact in reducing U.S. agricultural exports. I don’t see how the situation alleviates itself for some time to come.” (DTN)

The first light to moderate snowfall of the season is scheduled to arrive early Friday morning. Accumulating snow of 4 to 8 inches is forecast for the Upper Plains, Eastern North Dakota and Northern Minnesota. Some areas near the Canadian border could receive over 8 inches.

WeatherTrends 360 temp and precipitation outlook maps for next week.

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