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September 2021 WASDE Preview: Will the bears emerge from hibernation?

Getty/ArtSvitlyna Aerial view of farm fields
2021 acreage, yields to force downward price pressure in tomorrow’s USDA reports.

USDA’s National Agricultural Statistics Service surprised markets last week when it announced it would update 2021 acreage estimates in the September Crop Production and World Agricultural Supply and Demand Estimates reports.

In prior years, NASS has typically updated acreage estimates in the October reports. But NASS’s Agricultural Statistics Board determined it had enough producer, acreage registration, satellite, and market data from USDA’s Farm Service Agency and Risk Management Agency to update the acreage estimates a month earlier than markets were expecting.

According to a press release from the ASB released last week, “It is normal practice for NASS to review these data in September for cotton, peanuts, and rice. The review typically takes place in October for corn, sorghum, soybeans, and sugarbeets, however the data are sufficiently complete this year to consider adjustments in September.”

So buckle up, sports fans. Tomorrow’s data updates could create quite the stir in the markets!

Farm Futures will have the most up-to-date coverage of tomorrow’s reports, so be sure to check in with us after USDA releases the data at 11am CDT. Check out our website (FarmFutures.com) or our social media platforms (@FarmFutures) for the latest insights and analysis!

Acreage, yields & the FSA data debacle

2021-22 U.S. Corn and Soybean Production

Production will be top of mind in tomorrow’s reports, especially for corn. Timely rains and moderate temperatures helped boost yield prospects in mid to late August, if data late season crop tours provides a general indication of USDA’s intentions for tomorrow’s reports. Early trade estimates suggest an increase in corn yields and acreage, both of which would go a long ways in widening new crop corn supplies.

In the last eight trading days, December 2022 corn futures have closed lower in seven of those sessions, losing $0.4275/bushel since August 30. A big part of lower prices has been influenced by stalled exporting paces in the Gulf of Mexico due to damage from Hurricane Ida.

Plus, the FSA accidentally released the latest estimates for crop acreages registered for failed, planted, and prevent plant designations yesterday morning. After taking it down and reposting it prior to the scheduled release time of Friday, September 10 at 12pm CDT, FSA decided to leave the data up on its website.

The FSA released its first look at acreage estimates in August following last month’s WASDE report release. FSA acreage data is considered by NASS when NASS calculates annual acreage estimates and evaluating results from NASS’s periodic producer acreage surveys.

To be clear – NASS’s survey is the major factor in determining crop acreages. But acreage registration information from FSA and reporting data from RMA – the branch of USDA that provides federally subsidized insurance and risk management programs to farmers – are examined in conjunction with NASS’s surveys to arrive at final acreage estimates.

In August, FSA reported that 90.3 million acres of corn had been registered for both planted and failed acreage across the country. An estimated 85.3 million acres of soybeans and 48.8 million acres of wheat were registered at that time as well.

The results from yesterday’s IT snafu varied slightly from the August findings, adding fuel to the flames about the argument for larger corn acreages expected to be released in tomorrow’s Crop Production and WASDE reports.

Corn acres registered for both planted and failed acreage rose to 91.2 million acres. For soybeans, that total increased to 86.2 million acres while wheat acres registered inched up to 49.3 million acres. To be sure, acreage revisions in FSA’s monthly report are not uncommon, but these findings – and the timing – certainly increase the looming market expectation that USDA’s World Agricultural Outlook Board has some incentive to increase 2022 corn acres in tomorrow’s report.

It would be an incredibly rare feat if it does happen. There have only been four times in the past 25 years that USDA’s final corn acreage is higher than its June estimates (2005, 2007, 2010, and 2012). Looming export capacity and economic recovery concerns have led grain prices lower over the past couple weeks – and have made 2022 soybean and wheat crops a more attractive option for growers looking to the future.

The prospect of larger corn supplies will likely do little to stop this bleeding, as Farm Futures contributing analyst Bryce Knorr outlines in the latest Ag Marketing IQ column. And with fertilizer prices climbing, farmers may want to spend today locking in 2022 input pricing. Or examining the feasibility of other crop rotations for 2022.

Domestic stocks to rise

U.S. 2021-22 Ending Stocks

Supplies will be the top factor influencing total ending stocks – and prices – in tomorrow’s reports, but there are several demand factors to watch as well. Old crop (2020/21) corn and soybean stock volumes will not be made official until the September 30 Quarterly Grain Stocks report.

With livestock herds shrinking due to rising feed costs and pasture conditions in the Plains plagued by drought, the feed and residual usage categories will likely bear the brunt of adjustments down the road.

Summer 2021 fuel consumption was nearly 4% lower than the same levels in Summer 2019. Weekly ethanol production finally broke an eight-week skid in this morning’s Weekly Petroleum Status report from the U.S. Energy Information Administration. That could boost old crop supplies by the time September 30 rolls around.

The outlook for soybeans favors farmers more than that of corn. Old crop supplies are likely to remain little changed as domestic production and exports remain idle amid dwindling countryside stocks. New crop supplies are expected to grow on the heels of more optimistic yield projections, though strong domestic processing and export targets will likely snap up any additional bushels that come online.

That will likely keep new crop soybean stocks tight for another marketing year. Soybean prices are at lower risk for major price fluctuations in tomorrow’s report than those of corn as a result.

Wheat stocks are likely to tighten in tomorrow’s report, though the recent export slowdown in the U.S. Gulf due to damage from Hurricane Ida could alter USDA’s export estimates for wheat – as well as soybeans and corn – in the latest data update.

Tightening wheat stocks in 2021/22 increases profitability estimates for wheat crops in 2022, especially considering the global crop shortfalls experienced by top exporters Russia, the European Union, the United States, and Canada this year. That could also shift 2022 acreage projections to favor soybeans and wheat over corn.

Changes to world stocks

World 2021-22 Ending stocks

U.S. stocks will drive the majority of global stock changes in tomorrow’s WASDE report for corn and soybeans.

We are still a few weeks away from seeing planting progress begin in South America. Brazil is expected to harvest a record-setting 5.3 billion bushels of soybeans next year, which would go a long ways in alleviating global supply pressures on the soy complex.

USDA attachés in India suggest that rising feed prices could trigger higher soymeal import rates in the 201/22 marketing year. And an attaché in Beijing estimates 2021/22 soy imports for China will likely remain unchanged from last month’s WASDE report at 3.7 billion bushels, up nearly 147 million bushels from last year’s rates.

Trade estimates are relatively neutral on potential changes to global wheat stocks, but it is something that I will be keeping a close eye on tomorrow. With wheat harvests in the Northern Hemisphere largely wrapped up, production estimates will not likely see significant shifts like in last month’s WASDE.

But higher prices could shift livestock demand for feed wheat back to corn at the global scale. Tight global wheat supplies have a more inelastic impact on prices. Given the challenges global wheat production has faced this year, I am likely to find any changes to global wheat production and usage patterns significant going forward, especially as 2022 acreage decisions are currently being made in the U.S. Plains and Pacific Northwest.

USDA World Production

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