Crops Slide as USDA Lifts Output Forecasts

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Crop futures eased to finish the Tuesday trading session after the U.S. Department of Agriculture (USDA) published its October World Agricultural Supply and Demand Estimates (WASDE) report 

The U.S. government raised its 2021-2022 domestic soybean output projections by 74 million bushels to 4.4 billion bushels. It lifted U.S. soybean inventory expectations for the current marketing season by 145 million to 4.7 billion bushels. Soybean ending stocks were estimated to total 320 million bushels, up 135 million from the previous month’s report.  

According to the WASDE numbers, corn output is expected to increase 23 million to 15.019 billion bushels, and ending stocks for 2021-2022 advanced 92 million bushels. Exports were also anticipated to jump 25 million bushels amid diminished competition from other large exporters.  

Projected ending wheat stocks were slashed by 35 million to 580 million bushels, the lowest level in more than a decade. However, U.S. shipments to foreign markets were unchanged at 875 million bushels.  

“Overall, a mildly bearish WASDE, but mainly taking into account widely already known factors,” noted CRM Commodities Ltd. (CRM Agri), an independent agricultural commodity research and advisory services firm.  

Epoch Times Photo
A farmer harvests crops near Presho, South Dakota, on Oct. 13, 2014. (Andrew Burton/Getty Images)

November corn futures settled 1.74 percent lower to $5.2375 on the Chicago Board of Trade (CBoT). November soybean futures slumped 2.4 percent to fall below the crucial $12 mark. Wheat futures edged up 0.48% to $7.3525 a bushel.  

Despite the bearish nature of the report, market analysts noted that the WASDE report confirmed what many had been expecting: larger crop yields. At a time when global food prices surged to a ten-year high, according to the United Nations Food and Agriculture Organization’s (FAO) Food Price Index, this could be welcomed relief for consumers at the supermarket and neighborhood restaurants heading into next year.  

The State of Commodities in 2021  

Hard and soft agricultural commodities have had a roller coaster ride for much of 2021. Although these products might have peaked, commodities strategists are mixed if the bull run is still on in the fourth quarter of this year.

Corn  

This year, there have been many developments triggering volatility in the corn market.  

According to an exclusive report by Reuters, President Joe Biden and his administration have been considering cutting the country’s biofuel blending requirement. Documents viewed by the newswire highlighted that the Environmental Protection Agency (EPA) would slash blending mandates to 18.6 billion gallons in 2021 and 20.8 billion gallons in 2022. If approved, the move would affect corn farmers who produced the raw ingredients for ethanol.  

In South America, Argentina, the sixth-largest corn producer in the world, could see more requirements and restrictions on exports. The Argentine government wants to “intelligently manage export balances” to curb domestic food prices. 

Year-to-date, corn futures have surged about eight percent.  

Soybean  

After hitting a nine-year high of $16.67, soybean prices have been in freefall, tumbling 11 percent since July. While it might be challenging to pinpoint a specific circumstance that sent prices plummeting, there have been multiple developments in recent months.

The weather has been one of the key factors for soybean prices. As a result, investors were focused on rainfall in the U.S. Midwest this past summer. According to the National Oceanic and Atmospheric Administration (NOAA), August precipitation totals ranked the 14th wettest in the 127-year period, coming in more than three inches above average.  

After facing its worst drought in decades, delaying soybean planting and hurting the corn crop, Brazil’s 2021-2022 soybean planting has reached ten percent as rainfall has facilitated soil moisture.  

“There was rainfall in a large part of Brazil last week, which favored fieldwork in regions where the planting was already advanced and also allowed the sowing to start in regions where producers were waiting for better humidity conditions,” said agribusiness consultancy AgRural in a statement.

Epoch Times Photo
A farmer makes a repair to a grain drill while planting soybeans near Dwight, Illinois on April 23, 2020. (Scott Olson/Getty Images)

In recent weeks, USDA data showed that soybeans weighed and inspected for export were down 80 percent from the same time a year ago. Moreover, China’s soybean imports have been declining as low crushing margins and sky-high prices diminished demand in the world’s largest consumer of the bean. This has resulted in Brazil’s soybean exports being projected lower on year, despite Beijing transitioning its acquisitions from the U.S. to Rio de Janeiro.  

Year-to-date, soybean prices are down 8.5 percent.  

Wheat  

Even before the recent WASDE figures, global wheat inventories had been showing signs of shrinking this year.   

Over the last few months, several major markets, including Russia, Canada, and France, have slashed production estimates or exports. Plus, Moscow installed an export tax for its wheat shipments as part of efforts to limit food price inflation, raising its shipments duty to $31.4 per ton.  

At the same time, international demand, led by China, has increased. Beijing’s 2020-2021 wheat import estimate soared 140 percent, the highest in two decades.  

Year-to-date, wheat is up more than 14 percent.  

Relief at the Supermarket?  

From higher food prices to scarcity on store shelves, it has been a rough year for shoppers at the local supermarket. Yet, despite the bearish tone of the monthly USDA snapshot of the commodities market, some analysts assert that it could be some time before prices begin to tumble. Soaring fertilizer prices, rising energy costs, and supply chain challenges are all factors that could maintain upward pressure on grocery bills in the coming months. 

Andrew Moran

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Andrew Moran covers business, economics, and finance. He has been a writer and reporter for more than a decade in Toronto, with bylines on Liberty Nation, Digital Journal, and Career Addict. He is also the author of “The War on Cash.”



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