Trade Expectations for USDA’s Report Monday
USDA will update its US wheat production forecasts in the production report and will update global balance sheets for other crops.
The wheat production totals and updated US balance sheets will incorporate USDA’s June Acreage report, which is a key reason the trade looks for higher winter wheat production.
Winter wheat is seen higher versus a month ago with the average estimate at 1,331 million bushels, up 22 million; HRW production is seen higher.
Other spring wheat production is seen at 459 million bushels by the trade on average, which is larger than our current outlook.
The trade looks for lower corn production for Argentina + Brazil at 140 million tonnes versus 146 million in June.
US corn production is seen at 15,115 million bushels, up from 14,990 million in June on a slightly lower yield assumption but higher acreage.
US soybean production is expected at 4,394 million bushels versus 4,405 million in June, again on acreage changes and a slight yield reduction.
US balance sheets also will incorporate June 1 stocks into the balance sheets with old crop stocks seen lower for corn and unchanged for soybeans.
New-crop stocks are seen smaller for wheat, slightly larger for corn, and down marginally for beans versus the June forecasts.
FBN’s Take On What It Means: USDA’s updated outlooks for US corn and soybean production will not be based on survey data whereas the wheat production updates are survey based. Lower corn output from Brazil is not surprising given the dry weather and cold snaps the crop has faced. That is a plus for feed grains in general, but particularly for corn exporters. We think the trade has overshot US spring wheat production for the US, but USDA may not make such a bold forecast this early in the growing season.
China Soy Crush Up On The Week
JCI reported Chinese weekly soy crush increased 404,000 tonnes to just over 2 million tonnes, up 3% from last year.
The weekly crush total has been over 2 million tonnes only twice this year and has not been this high since early February.
Meal stocks increased only marginally to 1.1 million tonnes as the meal basis remained weak.
Cumulative 2020/21 crush is estimated at 68.3 million tonnes, up 3.4 million compared to USDA projecting up 4.5 million for the year.
USDA’s is likely over estimating 2020/21 Chinese bean demand, and both imports and crush could be 1 million tonnes lower than current projections.
The Ministry of Agriculture and Rural Affairs stated that by the end of the first quarter of 2021, the national live hog inventory and sow inventory recovered to 94.2% and 96.6% of pre-African Swine Fever levels in 2017.
Based on MARA’s projections, the hog herd will reach 2017 levels this month, despite ASF outbreaks reported in multiple provinces earlier this year.
FBN’s Take On What It Means: Negative crush margins and weak domestic meal demand have restricted crush rates in China. Considering crush margins remain negative, last week’s sharp increase was surprising. The softer meal basis may be encouraging end users to increase their meal orders which helped raise crush rates. We continue to expect China’s meat demand to grow and support demand for feed supplies.
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