Crop outlook: Focus turns to U.S. export pace

CHAMPAIGN, Ill. — The corn and soybean crop sizes are basically in the books for the 2021-2022 marketing year, but global demand remains a big question mark going into the new year.

Scott Irwin and Joe Janzen, University of Illinois agricultural economists, gave their forecasts for the remainder of the marketing year in the virtual Illinois Farm Economic Summit, hosted by farmdoc.

“Looking back and how we’ve gotten to where we are today, we saw (March 2022 futures) corn prices below $4 in the middle of 2020 and a slow and steady decline early in 2021 and then reaching a peak in about mid-May. So, we’ve seen a much more volatile, but also a higher price situation since the middle of 2021. The question is with relatively high prices where we go from here,” Janzen said.

“For soybeans the picture is semi-similar to corn. We have relatively low March 2022 soybean futures prices more than a year ago, under $9 in June and parts of July in 2020. There was then a long and steady climb through 2020 and 2021, peaking in the middle of the 2021 growing season and drifting lower, some relatively recent strength.”

Global Supplies

With the crops in the bins and trade awaiting the U.S. Department of Agriculture’s final crop summary in a few weeks, one of the big market movers will be the global story.

Both corn and soybean global supplies are rebounding relative to the 2020 crop.

“We’re seeing a slight rebound in availability in global stocks-to-use ratios increasing slightly. In part that’s rebounding supply, but usage is strong and so the tightness of the global market for both corn and soybeans is still relatively tight compared to where we were maybe a year and a half, two years ago when we saw much, much lower prices,” Janzen continued.

“Going forward in this marketing year for the U.S., export competition is an important outstanding factor. The major players are the United States, Argentina and Brazil. On the corn size, Ukraine is a major export competitor of exports, as well. All of those competitor nations — Argentina, Brazil and Ukraine — are expected to be relatively strong both for corn and for soybeans.

“On the demand side, China is the biggest importer on both the corn and soybean balance sheets, but the corn balance sheet being a little more diffuse. How likely is it that we’re to get to the export number that USDA projects for the United States — 63.5 million metric tons for corn, 55.8 million metric tons for soybeans?”

Committed Versus Actual

For committed sales and actual exports, on the corn side there were strong export sales commitments in early May with China coming into the corn market and committing to buy significant amounts of U.S. corn. Within about three weeks China committed to buy just under 11 million metric tons of U.S. corn.

“We saw that pace sort of slowing down as we move into the marketing year, but if we project where we’re at with commitments and exports out to the end of the marketing year we get to a number that’s pretty close to that USDA forecast of 63.5 million metric tons for corn,” Janzen said.

“The concern that exists is if all of those committed corn sales turn into actual exports and here the picture is a little bit more uncertain. While 36% of our commitments and actual corn exports are expected to go to China, only 11% of what’s been shipped is being moved to China.

“The pace of actual sales has been relatively slow to this point. Some of that might be due to supply chain issues. We had the hurricane in the Gulf in September and what’s happened in more recent weeks through November isn’t particularly encouraging.

“The other uncertainty is that USDA projects significant imports of corn by China and there’s uncertainty about whether China imports that much corn. The current USDA forecast is based on last year’s actual number of about 26 million metric tons of corn imported by China. There’s a question about whether they’ll actually import that much.”

On the soybean side, the current export pace — actual exports plus committed sales — is similar to what has occurred in past years.

“We’ve seen particularly strong movement to turn those committed sales into actual exports. The total soybean sales pace today is really close to the five-year average. If you carry that number forward based on past behavior we get something really close to the WASDE forecast and we’ve done relatively well in turning sales commitments to actual exports,” Janzen noted.

The accumulated soybean exports through October and November increased sharply following early slowness that was mainly a result of supply chain disruptions in the Gulf of Mexico.

“So, I see sort of big picture that we’re sort of well on track to meet the WASDE forecast on the soybean side. There’s a little more uncertainty on the corn side because of this issue of turning committed sales into actual exports and whether we can get there on the corn side is an open question,” Janzen said.

Price Projections

Irwin compared the 2021-2022 corn and soybean supply and demand balance sheets from USDA to those that he and Janzen developed.

The ag economists forecast final corn acreage of 93.5 million acres and harvested acres of 85.3 million. USDA in November had 93.3 million planted acres and 85.1 million harvested acres.

Irwin and Janzen estimates U.S. corn yield to average 177.3 bushels per acre compared to USDA’s projection of 177 bushels per acre.

“This would result in roughly 60 million bushels of higher production in our forecast. The biggest thing to note on the use side based on Joe’s analysis we’re going to lower corn exports for the current marketing year by 25 million bushels, recognizing that an uncertainty about shipments,” Irwin said.

Irwin and Janzen’s estimates would result in corn ending stocks at 1.58 billion bushels compared to USDA’s 1.493 billion bushels in November. That would be a stocks-to-use ratio of 10.7% while USDA’s estimates would be 10.1%.

As a result, Irwin and Janzen project a season average farm price for corn of $4.85 per bushel, compared to $5.45 per bushel by USDA for the 2021-2022 marketing year.

On the soybean balance sheet, Irwin and Janzen kept the same planted and harvest area that USDA had in its forecast at 87.2 million and 86.4 million, respectively.

USDA’s U.S. average soybean yield is 51.2 bushels per acre and Irwin and Janzen plugged in 51.5 bushels per acre.

“We expect in the final survey in January to find a little bit higher soybean yield,” Irwin added.

Beginning stocks of 256 million bushels was unchanged from USDA but production was up 25 million bushels with their estimates.

“We kept the usage numbers basically the same. We don’t see anything that would lead us to disagree right now with the November WASDE estimates. The increase in production gives us just slightly higher ending stocks projection of 365 million bushels versus 340 million by USDA and a slightly higher stocks-to-use ratio of 8.4% compared to USDA’s 7.8%,” Irwin said.

The ag economists’ season average farm price for soybeans was the same as USDA’s at $12.10 per bushel for 2021-2022.