10 September 2021

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  • HEADLINES: Chicago rallies as there was no bearish surprises from NASS/WASDE Reports; World exporter stock/use ratios bullish; Harvest yield data to rule.
  • The USDA September Crop Reports were neutral with big surprises lacking. The market’s attention will now turn to the September Stocks report at the end of this month and actual harvest yield data that will start to be reported on a near daily basis next week. US export demand also plays a large price role.
  • NASS estimated the 2021 US corn crop at 14,996 million bu, the second largest on record with a yield of 176.3 bushels/acre. The US corn yield was just under the 2018 US record of 176.6 bushels/acre. US 2021/22 corn end stocks were forecast at 1.408 million bu, up 166 million. Incorporating FSA data, NASS increased 2021 US corn seedings by 600,000 acres to 93.3 million acres while harvest acres rose a like amount to 85.1 million acres. The increases were less than the bears had forecast. We doubt that NASS will adjust US corn seeded acres again until the January final.
  • The Illinois corn yield was a record large 214 bushels/acre, Iowa at 188 bushels/acre, Indiana 197 bushels/acre, while Minnesota was dropped to 174 bushels/acre. Illinois, Indiana, and Ohio yields were record large. The N Dakota corn yield was 108 bushels/acre while S Dakota was 133 bushels/acre. The US yield risk is to the downside in our view. It is ear weight that will now determine US corn yield in October/November.
  • US soybean production was forecast at 4,274 million bu, a gain of 35 million from August. NASS raised the US soybean yield to 50.6 bushels/acre, a gain of 0.6 bushels/acre with planted acres falling 400,000 acres to 87.2 million and harvested acres declining 300,000 acres to 86.4 million acres. We would argue that based on the Dakota drought, US harvested soybean acres could drop another 100-200,000 acres.
  • US 2021/22 soybean end stocks were forecast at 185 million bu including a bump in old crop stocks of 15 million. WASDE raised 2021/22 US soybean exports by 35 million bu to 2,090 million bu based on larger China imports, while it cut crush by 25 million to 2,180 million bu. We are surprised by the crush decline due to fat margins produced by renewable diesel demand that will be building throughout the crop year. It is possible to argue that the USDA should have raised its 2021/22 crush forecast by 15-25 million bu, not cut it.
  • Like corn, Illinois. Indiana and OH produced record soybean yields of 64 bushels/acre, 60 bushels/acre, and 58 bushels/acre, respectively. The N Dakota soybean yield held steady at 25 bushels/acre while S Dakota fell 2.6 to 38 bushels/acre. The big yield gain from August occurred in Minnesota which raised its soybean yield by 9 to 47 bushels/acre.
  • Like corn, NASS appeared to use a healthy soybean pod weight in its September soy yield determination. Indiana pod counts were down 10%, yet the yield was record large. We anticipate a declining soybean yield total by the final in January.
  • We see November soybean futures in a range of $12.50-14.25 in the coming months as the market monitors Chinese demand and the start of the S American crop production cycle. Soyoil should gain on soymeal, and we fail to find any reason why US domestic soymeal use was cut.
  • The USDA lowered 2021/22 US wheat end stocks to 615 million bu (down 12 million) with a reduction of 10 million bu in imports and modest 2 million boost in food use. Such US wheat stocks are the tightest looking backwards into 2012/13. We note that it is the September 30 Final Small Grains Report which will determine final 2021 US wheat production with a sizeable reduction in US HRS wheat harvested acres expected. It is likely that 2021/22 US wheat end stocks will decline to 525-550 million bu following this key report. Also, we expect that US wheat was heavily feed in the June-September time frame.
  • 2021/22 world wheat end stocks rose by just over 4 million mt to 283.2 million amid a larger Australian wheat crop along with a 900,000 mt boost in China. The Russian wheat crop was left at 72.5 million mt with its exports at 35 million. China is forecast to import 10 million mt of wheat while the EU exports 35 million mt. The USDA lowered its Canadian wheat crop estimate to by 1 million to 23 million mt. We anticipate for a further decline of 1-2 million mt in Canada due to low yield reports. World wheat prices are unlikely to fall much farther.
  • Chicago corn futures rose to a $7.75 high last crop year with end stocks of 1,187 million bu and soybeans to $16.00 with end stocks of 175 million bu. US wheat end stocks will be 229 million bu smaller this year with wheat not available to be fed next summer. Our point is that it does not take much new demand or loss of US or world supply to produce a dynamitic Chicago bull market from current levels.
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