By Karl Setzer

 We are starting to see more interest in potential new crop U.S. balance sheets and more of an emphasis on corn. A tight new crop soybean carryout is already predicted, but we are now seeing tighter new crop corn estimates as well. In March, the USDA showed a lower than expected corn acreage figure. We have also seen reductions to old crop ending stocks in recent supply and demand reports. Thoughts are this could give us a new crop corn carryout figure of just 1 billion bu (bbu) compared to previous estimates for 1.5 bbu.

What the United States will see for final acreage this year remains a primary factor in price discovery. We continue to see estimates released on how plantings will be divided with several factors coming into play. One is the price ratio between corn and soybeans which currently stands at 2.5:1 which does not favor one crop over the other. Higher corn fertilizer values favor soybean production, while rotation would indicate more corn plantings. Spring weather may end up being the dominate factor in actual acres, same as it is in many years.

The Census U.S. usage numbers for March have been released with favorable numbers. Corn use for ethanol in the month totaled 420.4 million bu (mbu). This was the highest monthly use number of the calendar year, and the first time 2021 ethanol grind was above the same month in 2020. This was enough to push yearly corn grind to 2.87billion bu (bbu). Monthly grind now needs to average 421.2 mbu for the remainder of the marketing year to meet the yearly USDA estimate.

Soybean crush in the month of March totaled 188.2 mbu. This was in line with expectations and put yearly soybean crush at 1.3 bbu. With five months left in the marketing year cumulative crush now stands at 59.4 percent of the yearly projected total. We now need to average a monthly soybean crush of 177.9 mbu to reach our yearly projection of 2.19 bbu. Soy oil stocks at the end of March were tighter than anticipated at 2.25 billion pounds.

The Census export numbers for March were also released and were mixed. March corn exports were a record for the month at 372.75 mbu. This brought yearly corn exports to 1.476 bbu, the second largest export pace on record, just behind 2007-08. Soybean exports for the month totaled 84.4 mbu which was down 49 percent from February and down 11 percent on the year. Soy product exports were also down as interest shifted to South America. Wheat exports totaled 78.9 mbu which was a four-year high for March.

Another region of the globe that is seeing elevated corn demand is Brazil. Brazil is starting to shift away from sugar and more toward corn as a raw stock for ethanol manufacturing. Corn-based ethanol production has increased 58 percent in Brazil and now has a 9 percent market share. Volatility in sugar values and supply is leading the shift toward corn. This has started to put a strain on Brazil’s corn balance sheets though and is a leading reason why Brazil has exhausted its corn supply in recent years. Even with elevated production Brazil will have to reduce exports to maintain adequate domestic reserves.

We are already starting to see estimates on the next production season in South America with larger crops forecasted. Analysts are predicting Brazil 2022 crops at 140 million metric tons (mmt) on soybeans and 115 mmt of corn. Argentine crops are projected at 50 mmt for corn and 56 mmt for soybeans. A return to more normal weather patterns is the primary factor in the larger crops, as are elevated plantings, mainly in Brazil.

One of these estimates came from the USDA attaché. The attaché believes Brazil will seed 99 million soybean acres next year. It is the group’s belief that production from this will total 141 mmt. Brazil exports are forecast at 87 mmt from the attaché compared to this year’s 85 mmt estimate. This will further narrow the window for the United States to make sales into the global market.

The Bureau of Economic Analysis released some surprising data. According to the bureau, per capital disposable income in the United States hit a record $5,513.00 in March. This was also a record gain of $1,063.00 from February and a large $1,329.00 from March 2020. This news benefited commodity demand, mainly in the retail meat sector. Boxed beef and pork cut outs have rallied on the consumer spending this increase has generated.

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