By Michele F. Mihaljevich
MCHENRY, Ill. – Analysts with Allendale, Inc. shared their thoughts on the outlook for corn, soybeans and wheat during the company’s annual AgLeader Winter Conference Series on Jan. 24.
Worldwide demand for U.S. corn is down, said Steve Georgy, Allendale president. Year-to-date corn exports are 35 percent below the five-year average.
“Demand for U.S. corn is quite a bit less and the reason is because we’re still overpriced,” he explained. “Brazil is $20 a tonne cheaper than U.S. corn. We’re competing. If we’re looking for new buyers to come into our corn we are sitting way overpriced.”
That U.S. exports have been slow isn’t a secret, Georgy noted. “We know it. The market knows it. Yet we haven’t really made any adjustments to the price, even knowing this information.”
For the year, USDA is estimating exports of 1.9 billion bushels. To reach that goal, remaining sales would need to improve 9 percent over the five-year average through August, he said.
Domestically, demand for U.S. corn is impacted by ethanol, and feed and residual numbers, Georgy said.
Gasoline usage in the United States dropped from 143 billion gallons in 2016 to 135 billion in 2021. It was about 131 billion last year, Georgy said. USDA has estimated 5.28 billion bushels of corn will go into ethanol this year while Allendale has projected 5.25 billion bushels.
USDA has lowered its feed usage estimate for the year. From September to November 2022, feed usage was 2.4 million bushels, down from nearly 2.6 million in the same period in 2021-2022.
“The big thing for cattle is we’ve got less mouths to feed,” Georgy stated. “We’ve got less cattle out there. So cattle feed usage, well, we should see less of it coming into this year.”
In 2023, Allendale has estimated growers will plant 90 million acres of corn, up from 88.6 million last year. Depending on production and demand, with trend line (182.6 bushels per acre) yields, ending stocks could reach 1.8 billion bushels, the biggest carryout number since 2019, he said.
For soybeans, year-to-date exports are up 10 percent over the five-year average, said Greg McBride, an Allendale broker. The company has forecast 35 million bushels more in old crop exports than does the USDA, bringing the number to 2.03 million bushels.
Competition may limit the new crop export gain to 50 million bushels, to 2.1 billion, he said.
“We’re moving at such a good pace, we’re above the five-year average,” McBride pointed out. “And even if we were to cut our exports at this point, we’d be able to cut about 28 percent and still make the USDA’s goals.”
The USDA lowered its soybean export estimate to 1.99 billion bushels in January from the December estimate of nearly 2.05 billion.
“I really do think they’re missing the boat on this export thing,” McBride noted. “I think we’re far enough along that the decrease they put in was not warranted, and they’ll end up coming back and adjusting that. We will see ending stocks tighten.”
The USDA has estimated old crop ending stocks for soybeans at 210 million bushels. Allendale has estimated 2.03 billion bushels of exports and old crop ending stocks of 181 million.
For new crop soybeans, Allendale has estimated – assuming a trend line yield of 52.5 bushels per acre – exports of nearly 2.1 billion bushels and ending stocks of 277 million. Allendale has projected growers will plant 89.1 million acres of soybeans, up from 87.5 million last year.
Wheat exports are down, with year-to-date old crop sales of 553 million bushels, said Nate Breisch, also a broker with the company. The number is the lowest sales figure in history for this date and is 22 percent lower than the five-year average pace.
“Right now, we’re a little bit behind pace,” he explained. “That’s not necessarily the most bullish thing if no one’s buying our grain and demand isn’t there. We need to see these numbers pick up a bit and I don’t know if that’s going to come in the form of massive demand, continued production problems out of Europe and parts of Australia, or are we going to have a tighter crop. Is there going to be a supply issue around the world where we don’t have a lot of production of wheat but demand is still there? They’ve got to get it from somewhere.”
Farmers planted 37 million acres of winter wheat last fall, up 3.7 million over the previous year, and the largest amount in eight years.
Yields have been erratic over the last several years, Breisch said, with an average of 55.3 bushels per acre seven years ago and 47 bushels last year.
If trend line yields hold for this year’s crop, production would increase 334 million bushels, he added.
“With the acres planted and with the potential for the wheat production that we have, things are looking good,” he said. “All of that being said, we’ve got to get some rain. I’m really worried this could become an issue.”
About 67 percent of winter wheat production is in an area of the country experiencing drought, Breisch said.