Outlook forum reveals early crop balance sheets

WASHINGTON — An initial forecast for 2022 agricultural commodity prices and production was unveiled at the Agricultural Outlook Forum Feb. 24-25.

“Grains and oilseed prices remain persistently high driven by sharply lower soybean production in South America and continued strong global demand for grains and oilseeds,” said Seth Meyer, U.S. Department of Agriculture chief economist.

“Multiple price supportive features are expected to continue in the 2022-2023 market year. Across the major commodities, implied beginning stocks for 2022-2023 are still historically low. The continuing impact of the South American drought will support prices.

“With expectations of continued global demand growth, the stock buffer is limited relative to recent history should a weather problem or other supply shock occur in a major producing country. Continued solid demand from China is projected for the coming marketing year. In addition, modest growth in U.S. motor gasoline consumption is expected to boost demand for ethanol.”

The grain and oilseeds outlook was prepared by members of USDA’s Wheat, Feed Grains, Rice and Oilseeds Interagency Commodity Estimates Committees.

These are the forecasts for the World Agricultural Supply and Demand Estimates report that will be released May 12.

Corn

Shifts in relative prices and higher input costs support a year-to-year decrease in expected corn plantings, although the decline is moderated by the highest projected corn price for crop insurance purposes in over a decade. Planted acreage is projected at 92 million acres, down by 1.4 million from last year.

The corn crop is projected at a record 15.24 billion bushels, about 1% above a year ago as a forecast decline in area is more than offset by a return to trend yields. The yield projection of 181 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather.

With beginning stocks higher relative to a year ago, total corn supplies are forecast at 16.805 billion bushels, or up just under 3%.

Total U.S. corn use in 2022-2023 is forecast virtually unchanged from a year ago as growth in domestic use is essentially offset by lower exports.

Food, seed and industrial use is projected up about 1% to 6.84 billion bushels.

Corn used for ethanol is projected to increase by 75 million bushels to 5.4 billion, based on expectations of growth in motor gasoline consumption.

Feed and residual use is unchanged at 5.65 billion, reflecting corn production near a year ago and expectations of declining cattle on feed numbers during the year.

Exports were reduced by 75 million bushels to 2.35 billion, with expectations of increased competition from other exporters despite global trade growth and continued robust demand from China.

Ending stocks are projected at 1.965 billion bushels, up 425 million from a year ago and resulting in stocks relative to use at 13.2%, which if realized would be the highest since 2019-2020.

The season-average corn price received by producers is forecast down 45 cents to $5 per bushel.

Soybeans

Soybean area is forecast to increase to 88 million planted acres as strong U.S. crush demand and the current drought in South America has resulted in very favorable new crop pricing opportunities for producers. U.S. farmers planted 87.2 million acres in 2021.

In addition, soybean plantings are expected to benefit as farmers focus on managing high production costs.

Soybean supplies are projected at 4.8 billion bushels, slightly above 2021-2022 on higher beginning stocks and production.

Soybean production is projected at 4.5 billion bushels, 1% above a year earlier with higher planted acreage accounting for most of the increase.

The yield forecast of 51.5 bushels per acre is based on a weather-adjusted trend assuming normal growing season weather.

Soybean exports for 2022-2023 are projected at 2.15 billion bushels, up 100 million from the 2021-2022 forecast.

U.S. exports are expected to be relatively strong through the first half of the marketing year with the current drought in South America limiting their exportable supplies this fall.

However, with a higher South American harvest expected in early 2023, export competition in the second half of the marketing year will likely limit additional U.S. gains.

Soybean crush is projected to rise for the second year in a row to a record 2.25 billion bushels, largely driven by growing domestic demand for soybean oil and supported by meal demand growth.

Since early 2021, tight global vegetable oil supplies and increasing demand for biofuel feedstocks in the United States have led to higher soybean oil prices and increased demand for crush. The trend is expected to continue into 2022-2023, with planned expansion of renewable diesel capacity to meet federal and state biofuel mandates.

Competition for biofuel feedstocks as new renewable diesel producers enter the market will support soybean oil prices and lead to lower soybean oil for methyl ester and food, feed, and other industrial uses.

Exports of soybean oil are expected to decline to 1.2 billion pounds, the lowest level since 2005-2006. Soybean oil stocks are projected 13% down from 2021-2022 to 1.8 billion pounds, leading to an average price of 68 cents per pound.

With increased soybean meal production and limited gains in domestic soybean meal use, soybean meal prices are forecast down to $375 per short ton. Lower meal prices are expected to result in higher soybean meal exports.

Like soybeans, soybean meal exports are expected to be relatively strong in the first part of the marketing year with limited exportable supplies in South America.

Soybean ending stocks for 2022-2023 are projected at 305 million bushels, down 20 million from the 2021-2022 forecast.

The soybean season-average farm price is projected at $12.75 per bushel, down slightly from 2021-2022.

Although current forward price opportunities will support prices received this fall, price expectations are likely to moderate later this year in anticipation of a rebound in production for South America in 2023.

Wheat

Strong wheat prices and the tightest stocks-to-use ratio since 2013-2014 are expected to boost total wheat acres to 48 million, compared to 46.7 million in 2021.

The all wheat yield for 2022-2023 is projected up 11% from last year’s drought-affected yield at 49.1 bushels per acre and is based on a long-term linear trend.

A significantly larger crop more than offsets lower beginning stocks and increases 2022-2023 supplies by 5% to 2.708 billion bushels.

At 1.977 billion bushels, projected 2022-2023 total use is up slightly from a year earlier but below the five-year average. U.S. domestic use is projected modestly lower on reduced feed and residual use despite increased supplies as corn is expected to be more competitively priced during the summer months.

Food use is projected marginally higher as population growth is expected to more than offset the effect of slightly lower per capita consumption.

Higher exports are expected to more than offset lower domestic use although exports are still forecast below the five-year average. U.S. export prices are expected to remain uncompetitive in several markets, limiting export gains.

With supplies projected to increase more than total use, 2022-2023 ending stocks are raised to 731 million bushels. This is 13% above last year but well below the five-year average.

The increased stocks and higher stocks-to-use ratio of 37% contributes to a projected 2022-2023 season-average farm price of $6.80 per bushel, down 50 cents from 2021-2022.