Feb. 15th - 19th

USDA’s 2021 Ag Outlook Forum was released Thursday morning with a peek at the possible acreage mix for 2021……

Corn:

The USDA is projecting planted area at 92 million acres, 1.2 million more than last year, but a little lower than anticipated, with the survey-based prospective planting report out at the end of March, along with quarterly stocks data.

All eyes are on Brazil’s second crop safrinha corn. With a 4.4% increase in acres over last year, it represents just over 75% of Brazil’s production. But the late planting continues, adding more risk to the overall production number.  On average, the crop would be over 30% planted by now, as corn planters chase soybean combines out of the fields. But soybean harvest is slow, so just over 11% of the crop is planted so far. 60% or more of the crop will be planted after the ideal planting window.

Mato Grosso is a bit further along, at over 21% planted. However, on average it is 47% planted by now, with last year’s crop 63% planted by now. Late planted corn is subject to weather risks that can play havoc with the estimated 88.6 bu/ac crop. The current estimates for Brazil’s crop range from 105.5 to 109.0 million mt.

Argentina’s corn crop is rated as 23% good/excellent. On average, it is 62% good/excellent at this time. Prolonged dry weather at the beginning of the growing season has not set the crop up for record yields, but soil moisture levels have improved considerably. Production estimates for Argentina range from 46.0 to 48.5 million metric tonnes, with 2 notable sources recently increasing their estimate (not the USDA though).

Corn export shipments from the U.S were down from last week. Compared to last year, exports are running 84% faster.  However, remember that last year represented a drop in the usual export volume from the U.S. A larger volume of the 2016 and 2018 crops had been exported by this time in 2017 and 2019, and that was without sales to China.

Export volumes this week are expected to step back slightly as winter weather delays impact rail, barge and truck movement across the U.S.

U.S ethanol production was down 26,000 barrels/day compared to the previous week (which was up 1000 barrels/day compared to the previous week).

Inventories climbed half a million barrels from the previous week. This week’s arctic blast through the U.S Midwest triggered some plants to slow/cease production due to natural gas supplies/prices, so production numbers should reflect that next week.

The IGPC ethanol plant at Aylmer is running at about 85% of capacity, while the Suncor plant is running at about 75%. As Ontario gradually reopens, gasoline (and thereby ethanol) consumption will be closely watched to see if these levels need to change.

There was some head scratching after last week’s WASDE report as to the posted exports and carry-out for the 2020 US corn crop. The group formally known as Informa wonders if the USDA is expecting some large cancellations or some rolling of 2020 exports into the 2021 crop year.

Soybeans:

The USDA’s Ag Outlook Forum puts planted area at 90 million acres, up sharply on the year and a little larger than expected. The USDA’s next set of estimates for the 2020/21 marketing year is out March 9th. The trade is continuing to monitor conditions in South America. Northern Brazil is expected to see more harvest delaying rain and while there is some rain in the forecast for Argentina, the net-drying effect is expected to continue. The Buenos Aires Grain Exchange says 11% of Argentina’s soybeans are in poor to very poor condition, compared to 8% last week. Brazil’s ANEC estimates February soybean exports at 6 million to 7.9 million tons, compared to 6.6 million in February 2020. There have been no new U.S. export sales announcements from the USDA in several days, with China’s Lunar New Year celebrations wrapping up this week.

Until early this week soybean futures had spent much of the last month trying to break a back-and-forth range-bound trade. Until we get more news to determine long term direction, whether that be South American harvest news, exports, U.S. planting news, etc., it may be difficult for the bean market to set new highs in the short term without a significantly bullish newsflash.  Anyone of these production issues combined with a 7 year low carryout number will continue to add to the volatility.

Wheat:

The USDA sees all 2021/22 U.S. wheat acreage at 45 million acres, up from 2020/21 and topping expectations, but still lower than average, even with the first anticipated increase in winter wheat acreage in 8 years.

Domestically, the full extent of any winterkill damage in the U.S. Plains and Midwest won’t be known until spring. Drought is also a continued concern in parts of the U.S. Plains, with the USDA’s next set of monthly state crop stories out next week. The trade is also watching overwintering weather in Ukraine and the European Union, conditions ahead of spring wheat planting in the U.S. Plains and Canada, and harvest activity in Australia. DTN says Japan bought 82,393 tons of milling wheat from the U.S., while Jordan purchased 60,000 tons of milling wheat and South Korea picked up 55,000 tons of feed wheat, both of those from unnamed origins.

Extreme cold weather across Texas, Oklahoma, and Kansas among others have put 30% of the US HRW wheat crop at risk of winterkill and damage. Kansas especially has very little snow cover for the record cold temps they’ve experienced this week.

Export sales were strong again this week, eclipsing the trade expectations. However the pace of shipments has been running slow still.

On the global front, Australia’s crop estimate has been raised to a record 33.34MMT. This is about 3MMT above current USDA estimates.

Russia’s winter wheat crop is seeing an improvement in moisture conditions, which bodes well moving into spring. Their crop estimates have also been bumped up 1MMT to 78MMT. 

Both here in Ontario, and across the US (and globally for that matter) the expectation is for increased wheat feeding in rations as the price has gotten so competitive to corn.