The USDA raised its estimates for US corn demand, signaling a tightening of supplies as the new planting season gets underway. But even with the revisions, Gro forecasts that the USDA is still underestimating the magnitude of US corn exports, which will keep prices high and increase pressure for greater production in the new season.
The USDA’s May WASDE report adjusted old crop corn exports higher given the strong shipping pace thus far and a shift in purchases to the US due to an expected decline in the Brazilian corn crop. As a result, the USDA lowered beginning stocks estimates for the 2021/22 marketing year by 7% to 31.9 million tonnes (1.3 billion bushels), keeping stocks-to-use at levels not seen since 2010-2012.
USDA estimates Brazil’s corn production at 102 million tonnes, down 7 million from the April forecast. Gro’s Brazil Corn Yield Forecast Model continues to show declining yields amid above-normal temperatures and lack of rain, as reflected in Gro’s Drought Index.
Gro’s export pace model, which uses export sales commitments to estimate demand for the full year, currently projects 2020/21 corn exports of 78.6 million tonnes (3.1 billion bushels), compared with the USDA’s 70.5 million-tonne estimate. While not all sales commitments necessarily turn into actual shipments, the sharp difference in projected exports underscores the likelihood that the USDA continues to underestimate old crop corn demand.
US corn export demand remains strong and the rise of China's domestic corn prices to a 16-week high at $11.50 provides plenty of incentive for more new-crop purchases. (By comparison, CBOT July corn futures are at $7.14/bushel.) US 2021/22 corn exports are expected to total 62.2 million tonnes (2.5 billion bushels), of which 26 million tonnes are forecasted for China, unchanged year over year.
Soybeans are facing even tighter supplies going into the 2021/22 marketing year, and US stocks-to-use will be at their tightest level on record to close out the current year. China soybean imports in 2021/22 are forecast at 103 million tonnes, a new record high. Gro’s China Pork Demand Forecast Model shows the demand for feed as the country’s hog population continues to recover.
Gro has for weeks been projecting that a perfect US growing season will be needed to match supplies with intended demand. Gro’s US Corn and Soybean Yield Forecast Models allow users to get daily updates of in-season yield estimates for these critical crops at the county, state, and national levels.
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