Market Analysis

The USDA’s 2021 acreage report surprised the trade again last week when the latest producer survey revealed only a modest corn (CORN) planting rise & declines in soybean (SOYB), sorghum, & cotton (BAL) seedings vs. trade’s expectations. The USDA will use these acreage levels in their July 12 US balance sheets. June’s quarterly stocks were near expectations limiting talk of 2020 corn and soybean crop size changes later this year. This information — plus current US processing & export trends — are utilized to our July US supply/demand updates along with a total look at the US wheat crop’s prospects given the N Plains drought.

Corn’s 1.55 million rise in seedings to 92.7 million with just a 1 million increase in 2021’s harvested area provides only 177 million larger crop if the USDA keeps its new-crop yield at 179.5 bu. Given this year’s higher seedings & drought stress in the WCB, a more realistic 177 bu national yield could be forthcoming from USDA, like 2019’s July cut in the US yield to 169 bu. On-going strength in US ethanol output & a recent freeze in Parana likely cutting Brazil’s corn crop to 90-92 mmt suggests demand raises will keep corn’s US stocks tight into 2021/22 year.

US soybean seedings slipped last month, but the USDA upped 2021’s harvested area by 20,000 acres potentially keeping their 2021/22 crop unchanged. However, similar to corn, 66% of 2021’s higher bean plantings (2.95 million acres) have occurred in the W Midwest. Given the current low soil moisture, a smaller 50 bu US yield seems appropriate at this time. To keep a minimal 2022 endings stocks, US bean demand needs to be shaved by 35 million bu.

Wheat’s (WEAT) June 1 stocks were 8 million lower than May’s forecast with higher feed & lower exports the adjustments. Higher hard & soft red wheat yield reports are out, but the PNW’s heat has hurt white wheat suggesting a 48 million higher US W Wheat crop. However, the N Plains drought has likely cut spring & durum by 82 million bringing the US wheat to 1.864 billion bu. Overall, wheat’s US ending stocks could slid to 728 million bu, down 42 million.

What’s Ahead:

The combination of the expansion and the absolute size of the US row crops in the NW region of the Midwest will keep the growing conditions in this region a major price and production factor for the 2021 US growing season. Expanding post COVID economic recovery will also likely keep the world’s food demand strong.

Hold your remaining old-crop and keep new-crop sales at 20-25% at this time.