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Trade expectations for May WASDE report; China corn crop forecast higher

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PIXABAY
PIXABAY

Trade Expectations for USDA’s May WASDE Report

  • USDA’s report is scheduled to be released May 12; the report will include USDA’s first balance sheet outlooks for the 2021/22 crop year.

  • The trade sees tighter old-crop US ending stocks versus the April numbers.

  • For new crop, the trade sees US wheat stocks declining with corn and soybeans gaining slightly but remaining tight.

  • The biggest change versus May is Brazil’s corn production outlook; the average trade estimate is at 103 million tonnes versus 109 million in April.

  • USDA is expected to cut the crop but could wait to move the needle by that volume until the June or July report; harvest for winter corn starts in June.

  • The trade sees global wheat stocks coming in at 294 million tonnes for the 2021/22 crop year, which would be down marginally from 2020/21 expectations at 295.5 million.

  • Global corn stocks are seen at 283 million tonnes for 2021/22, which would be down marginally from USDA’s 2020/21 forecast but would be higher than trade expectations for 2020/21 stocks at 279 million.

  • Global soybean stocks are seen rising to 88 million tonnes versus 87 million.

FBN’s Take On What It Means: Trade expectations for the report essentially are for no big changes to US or global balance sheets for the coming crop year. Supplies are forecast to remain overall snug; our guess is that production totals will be up for 2021 harvests versus 2020 harvests for the EU and Black Sea regions.

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China Corn Crop Forecast Higher

  • China National Grain & Oils Information Center forecast 2021 corn production at 272 million tonnes, up 4.3% from last year.

  • Corn area is expected to increase 3.3% to 42.63 million hectares, or just over 105 million acres.

  • China has cut corn planted area in recent years to reduce aging national stocks and boost output of other crops like soybeans.

  • 2021 soybean production is expected to decrease 6.1% from 2020 to 18.4 million tonnes.

  • The area planted to soybeans is projected to be down 6.9% to 9.2 million hectares or 22.75 million acres.

  • The wheat crop was forecast up 1.6% at 136.4 million tonnes, while rice output was seen up 1.5% at 215 million tonnes.

  • China was projected to produce 14.5 million tonnes of rapeseed in 2021, up 2.8% from last year.

  • Reports from a cabinet meeting last week, repeated China's Policy to increase the country’s grain security

FBN’s Take On What It Means: It’s not surprising corn area and production would increase in 2021 as China’s corn reserves have declined along with lower output in 2020, and record high prices encourage producers to plant more. Also, the government policy to increase incentives on soybeans is not as strong as in previous years. China’s demand for more feed grains should continue to support the need for imports and is likely a positive for prices in the coming year.

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