January 5, 2022
Corn and soybean production in 2021 will be largely finalized by USDA next week in the January 2022 Crop Production and World Agricultural Supply and Demand Estimates reports. Early farmer predictions from a recent Farm Futures survey suggest that 2021 yields are likely to remain little changed from earlier USDA estimates.
An email survey conducted by Farm Futures in December 2021 of 613 farmers found that nationwide corn yield for the 2021 growing season is estimated at 177.2 bushels per acre. If realized, that would top USDA’s current projection of 177.0 bpa for 2021 yields as the largest national corn yield in U.S. history.
After two consecutive years of crop shortfalls in 2019 and 2020, growers in the Farm Futures survey were increasingly optimistic about 2021 production forecasts. Weather conditions varied across time and geography in the 2021 growing cycle but overall, crops largely withstood turbulence during the growing season and reported better than expected yields by the time harvest ended.
Demand to keep corn stocks, prices competitive
If USDA leaves 2021 corn harvested acreage unchanged at 85.1 million acres (93.3M ac. planted) in next week’s Crop Production report, 2021 corn production would rise by 15 million bushels to 15.08 billion bushels. That would leave 2021 production unchanged as the second largest corn harvest on record.
The modest yield increase will add a marginal amount of volume back to tight ending stocks. Holding demand constant with USDA’s December 2021 forecasts of 14.8 billion bushels, ending stocks for the 2021/22 marketing year will rise a slight 1% to 1.51 billion bushels. That will bring the stocks-to-use ratio up to 10.2% from current projections of 10.1%.
Export prospects are less bullish for corn in 2021/22 as demand from China eases back from last year’s records. But domestic usage potential for ethanol and livestock usage are strong going into the 2022 calendar year.
Even with the omicron coronavirus variant’s onset, consumer fuel demand was steady through the 2021 holiday season. High fuel prices are likely to persist through the winter, barring any significant global production adjustment, so ethanol will likely remain a cheap fuel additive through the remainder of the 2021/22 marketing year.
Slight yield uptick for soybeans
The Farm Futures survey estimates 2021 national soybean yields at 51.4 bpa. If realized, that figure will remain one spot behind the record yield of 51.9 bpa set in 2016.
Soybean growing conditions were not able to withstand variable weather conditions across the U.S. Heartland this summer as well as corn, especially in the Upper Midwest and Northern Plains. But favorable yields in top producing states could push 2021 yield estimates higher than USDA’s current estimate of 51.0 bpa.
The slight uptick in 2021 soybean yields based on the Farm Futures survey would send 2021 U.S. soybean production to 4.44 billion bushels, up 17.8 million bushels from current USDA projections. If realized, the yield increase would best 2018’s haul of 4.43 billion bushels as the largest on record.
Domestic demand to offset soy yield increase
Holding demand constant at the December 2021 USDA projection of 4.36 billion bushels, the revised forecast would increase 2021/22 ending stocks to 356.8 million bushels – a 5% increase from current estimates.
That would widen the ending stocks to use ratio from 7.8% to 8.2%, dropping 2021/22 from the 17th to the 18th tightest soybean supply on record. While this yield change could add some bearish potential to soybean markets, the small volumes are not likely to justify a total selloff in USDA’s reports next Wednesday if USDA does report higher 2021 soybean yields.
Soybean exports in the 2021/22 campaign are likely to come in lower than those of 2020/21 as demand from China moderates and another record-setting Brazilian crop floods the market. But domestic demand will likely continue to sustain soybean prices as the push for green energy fuels biodiesel production to new heights. Tight global edible oil supplies also bode favorably for soybean prices in the new year.
One last look at 2021
While 2021 may not have exactly been a banner year for U.S. growers amid so many weather and market disturbances, it finally marked a year free from severe weather damage and the economic and trade disruptions that plagued 2019 and 2020.
Corn and soybeans stocks remain tight, but the historic stock shortfalls in the market this time last year will not likely be repeated in 2022 as the market prepares for next week’s data release from USDA. Production volumes helped resupply the demand pipeline for both commodities last fall and will likely keep prices stable if demand remains steady over the next few months.
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