By Karl Setzer

As harvest is starting to progress across the United States, we are seeing private analysts release their own projections on yields. Some of these are considerably different from what the USDA projected in the last set of balance sheets. A few of these have the US corn yield at 183 bushels per acre and soybeans at 51.5 bushels per acre. The USDA is projection a corn yield of 174.6 bushels per acre and a soybean yield of 50 bushels per acre. If actual yields are even close to these private predictions it will greatly change current stocks to use numbers. 

Quality is starting to become more of a topic in the global wheat market. Persistent rains in parts of the world have caused quality issues, with France seeing the most loss at the present time. Officials in France claim just 35% of the new wheat crop is high enough in quality to make milling grade. This is driving up the value of milling quality wheat around the world. At the same time is it creating more low-quality wheat that will make its way into the feed grain supply. 

When it comes to the global feed grain market much attention remains on China. China made several large corn purchases from the US earlier this year but has been mostly quiet since. This is worrisome for the corn complex as imports would be highly favorable for China given the fact their domestic corn is currently trading at $10 per bushel, well above the global market. A jump in China’s corn production is being forecast, which is limiting import interest. 

Another reason we may be seeing limited Chinese corn demand is a correction in its hog herd. China recently announced its hog herd had made a slight contraction, the first in two years. Poor margins are the leading cause for the lower hog numbers, but a resurgence in African Swine Fever is also a factor. Chinese feeders are now starting to weigh how much feed grain they will need to import which is affecting their buying habits. 

We are finally starting to receive end of the marketing year usage numbers. The July crush total on soybeans came in 1 million bu (mbu) under trade estimates at 164.3 mbu. This was a large 10.2% decline from last July as soybean inventories continue to tighten. This total brought year to date crush to 1.97 billion bu (bbu). To meet the USDA’s projected total for the year we will need to see an August crush volume of 181.5 mbu, a 3.4% increase from last August. 

Corn use for ethanol in the month of July came in at 449.1 mbu which was slightly higher than trade was expecting. The July total was a 5.9% increase from June and brought year to date corn usage to 4.6 bbu. To reach the USDA’s yearly projection on corn demand the August consumption will need to total 460 mbu, a 12% increase from August 2020. 

Census export data for the month of July was also released. Corn exports totaled 215 mbu, a 23.7% increase from July 2020. Soybean exports were down 58% in July at 35 mbu. Wheat exports were down 14.6% from July 2020 at 75 mbu. Beef exports came in at 107 metric tons, a yearly increase of 16.7%. Pork exports were down 9% from last year at 182 metric tons. 

Demand for US corn has been sporadic in recent weeks, but overall it is much higher than a year ago at this time. The US currently has 805 mbu of corn sales on the books, a 29% increase from last year. This increase is mostly from the large sales to China last spring, as they account for 53% of US corn sales. 

This demand for US corn may continue to increase. Wheat values have risen to a point where feed wheat is no longer competitive with corn. There are thoughts this will bring buyers back to corn for feed needs, and the US will soon be the source in the global market with the most abundant supply. The unknown in the global feed market is how much coverage buyers still need. 

While corn sales are solidly higher this year, soybean sales trail last year. This United States currently has 651.4 mbu of soybean sales on the books, a 26% decline from last year. This is mainly from a lack of Chinese buying. Soybean sales to China are currently 45% of total bookings compared to 56% last year. The larger soybean crop out of Brazil has allowed buyers to source soybeans there longer than a year ago. 

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