Focus on Ag: USDA report confirms continued tight grain stocks

Kent Thiesse
Farm Management Analyst
Kent Thiesse

The U.S. Department of Agriculture World Agricultural Supply and Demand Estimates (WASDE) report released on May 12 projected a continuation of tight corn and soybean ending stocks by the end the 2022-23 marketing year on August 31, 2023.

Wheat ending stocks were also estimated to remain very tight for the balance of the 2021-22 marketing year and through the 2022-23 marketing year.

From a grain marketing standpoint, the initial reaction to the WASDE report was widely regarded as somewhat “bullish” for corn and wheat and mainly neutral for soybeans. USDA is projecting average grain prices will remain strong through the 2022-2023 marketing year, given the tight supplies of corn, soybeans and wheat.

A closer look at corn

Based on the WASDE report, the projected corn ending stocks for the 2021-22 marketing year are estimated at 1.44 billion bushels, which was the same as the April report and was slightly lower than the average grain trade estimate. The 2021-22 corn ending stocks would be an increase from 1.235 billion bushels at the end of 2020-21 marketing year.

USDA is projecting total U.S. corn use for 2021-2022 will be 14.93 billion bushels for livestock feed, ethanol, exports, etc., which is a slight increase from the 2020-21 level.

The increase in corn usage was mainly due to an increase in the estimated amount of corn used for ethanol production in 2021-22, as compared to a year earlier. There was also a slight increase in the projected amount of corn used for livestock feed during the year.

Corn export levels for 2021-22 were estimated at 2.5 billion bushels, which would be a decline of 253 million bushels from the previous year.

The 2021-2022 corn stock-to-use ratio is now estimated at 9.6%, up from 8.3% in 2020-21, which was at the tightest level since 2012.

The report also offered an initial USDA estimate for ending stock levels for the 2022-2023 marketing year, which ends on August 31, 2023.

USDA is projecting corn ending stocks to decline to 1.36 billion bushels by the end of the marketing year, with the stocks-to-use ratio expected to increase slightly to 9.3%. The projected level of 2022-23 corn ending stocks would represent a decrease of 80 million bushels below the estimated 2021-22 corn carryover levels.

USDA is projecting total corn usage in 2022-23 to decline by 370 million bushels to just over 14.56 billion bushels. USDA is forecasting decreased corn usage levels for livestock feed but lower U.S. corn export levels in 2022-2023. Corn used for ethanol production is projected to remain steady for the 2022-2023 marketing year.

USDA is estimating total U.S. corn production for 2022 to be just over 14.4 billion bushels, which would be a decline of approximately 5% from the 2021 U.S. corn production level.

The USDA report expects an estimated 89.5 million acres in 2022 will be planted to corn in the U.S., compared to 93.4 million acres in 2021 and 90.7 million acres in 2020.

USDA is projecting the average U.S. corn yield at 177 bushels an acre in 2022, which is the same as the 2021 average yield and compares to 171.4 bushels an acre in 2020. This was 4 bushels an acre lower than the trendline corn yield forecast of 181 bushels an acre at the USDA Ag Outlook conference in February this year.

Corn planting progress in 2022 has been running well behind of normal in most areas of the U.S., which usually results in reduced national average corn yields.

As of May 12, USDA is estimating the average U.S “on-farm” corn price for the 2021-22 marketing at $5.90 per bushel, which was an increase of $0.25 per bushel from the April WASDE estimate. The current USDA projected corn price compares to the final national average prices of $4.53 per bushel for 2020-21, $3.56 per bushel for 2019-20, $3.61 per bushel for 2018-19, and $3.36 per bushel in 2017-18.

USDA also released the first estimated average corn price for the 2022-23 marketing year at $6.75 per bushel, which would be the highest market year average price in several years.

Strong demand for soybeans

According to the WASDE report, the projected soybean ending stocks for 2021-2022 are estimated at 235 million bushels, which is down by 25 million bushels from the April estimate but was very close to the grain trade estimates. The projected 2021-2022 U.S. soybean ending stocks compares to recent soybean carryover levels of 257 million bushels in 2020-21, 405 million bushels 525 million bushels in 2019-20 and a whopping 909 million bushels in 2018-19.

Total soybean usage for 2021-2022 is estimated to be just over 4.47 billion bushels, which is just below the total usage of 4.5 billion bushels in 2020-21.

Soybean export levels were projected to decrease slightly in 2021-2022 compared to a year earlier; however, soybean sales to China have remained strong.

USDA projected a slight increase in the bushels used for soybean processing in the U.S for 2021-2022 compared to crush levels in 2020-2021.

Some analysts feel that domestic soybean demand may increase in the next few years with several new or expanded soybean processing plants scheduled to come on board, focusing on the production of renewable diesel.

The WASDE report projects soybean ending stocks to increase by 75 million bushels to 310 million bushels by the end of the 2022-2023 marketing year on August 31, 2023.

USDA is estimating total U.S. soybean usage to increase by 108 million bushels in 2022-2023 as compared to usage levels for the current year, with increases in both soybean crush and export levels in 2022-2023. Worldwide demand for soybeans and other oilseed crops is currently very strong due to the continued Russian war in Ukraine.

The ending soybean stocks-to-use ratio for 2022-2023 is estimated at 6.8%, which compares to 5.3% in 2021-2022 and 5.7% in 2020-2021.

Total U.S. soybean production in 2022 is estimated at 4.64 billion bushels, which would be an increase from the estimated U.S. soybean production of 4.43 billion bushels in 2021 and just over 4.22 billion bushels in 2020.

Planted soybean acres for 2022 are projected at the record level of 91 million acres, which compares to 86.3 million acres in 2021. The previous record U.S. soybean acres was 90.2 million acres in 2017.

USDA is estimating a national average soybean yield of 51.5 bushels per acre in 2022, which compares to 51.4 bushels per acre in 2021 and 51 bushels per acre in 2020. The record U.S. soybean yield was 52.1 bushels per acre in 2016.

USDA is estimating the U.S “on-farm” soybean average price at $14.40 per bushel for the 2022-23 marketing year, which runs from September 1, 2022 to August 31, 2023. The preliminary price estimate for the 2022-2023 marketing year on May 1 is among the highest ever for that date.

The projected final market year average price for 2021-2022 is $13.25 per bushel soybean price, which compares to final average soybean prices of $10.80 per bushel for 2020-2021, $8.57 per bushel for 2019-2020, $8.48 per bushel in 2018-2019 and $9.33 per bushel for 2017-2018.

Average soybean prices for 2022-2023 will likely be highly dependent on 2022 soybean production in the U.S., as well as the level of U.S. soybean exports to China and other countries.

Ending on wheat

The May 12 USDA report projected U.S. wheat ending stocks to decline to 619 million bushels by the end of the 2022-23 marketing year on May 31, 2023. This compares to estimated ending stocks of 655 million bushels for 2021-22 and wheat carryover of 845 million bushels in 2020-21.

Wheat demand in 2022-23 is projected to decrease slightly from the current year demand, down to 1.88 million bushels, with the decline mainly due to lower export estimates.

Wheat acreage in 2022 is expected to increase to 47.7 million acres and total U.S. wheat production is expected to increase slightly in 2022 to 1.73 billion bushels. Many analysts are questioning the 2022 wheat production numbers due to planting delays in the primary spring wheat production region and continued drought in important winter wheat areas.

USDA is projecting the average “on-farm” wheat price at $7.70 per bushel for 2021-2022 and $10.75 per bushel for 2022-2023, which is more than double the final national average wheat price of $5.05 per bushel in 2020-2021.

For additional information contact Kent Thiesse, farm management analyst and senior vice president, MinnStar Bank, Lake Crystal, Minn., at 507-381-7960 or kent.thiesse@minnstarbank.com.