The U.S. government raised its 2021–22 domestic soybean output projections by 74 million bushels to 4.4 billion bushels. It lifted U.S. soybean inventory expectations for the current marketing season by 145 million bushels to 4.7 billion bushels. Soybean ending stocks were estimated to total 320 million bushels, up by 135 million bushels from the September report.
According to the WASDE numbers, corn output is expected to increase by 23 million bushels to 15.019 billion bushels, and ending stocks for 2021–22 advanced by 92 million bushels. Exports were also anticipated to jump by 25 million bushels amid diminished competition from other large exporters.
Projected ending wheat stocks were slashed by 35 million bushels to 580 million bushels, the lowest level in more than a decade. However, U.S. shipments to foreign markets were unchanged at 875 million bushels.
“Overall, a mildly bearish WASDE, but mainly taking into account widely already known factors,” independent agricultural commodity research and advisory services firm CRM Commodities (CRM Agri) stated.
A farmer harvests crops near Presho, S.D., on Oct. 13, 2014. Andrew Burton/Getty Images
November corn futures settled 1.74 percent lower to $5.2375 on the Chicago Board of Trade (CBoT). November soybean futures slumped by 2.4 percent to fall below the crucial $12 mark. Wheat futures edged up by 0.48 percent to $7.3525 a bushel.
Despite the bearish nature of the WASDE report, market analysts said it confirmed what many had been expecting: larger crop yields. At a time when global food prices surged to a 10-year high, according to the U.N. Food and Agriculture Organization’s (FAO) Food Price Index, this could mean welcome relief for consumers at the supermarket and neighborhood restaurants heading into 2022.
“Clearly, we could see some easing in food prices, given the looser looking balances for corn and soybeans,” Warren Patterson, head of commodity strategies at ING in Singapore, told The Epoch Times. “However, we will need to keep an eye on wheat, as the market continues to tighten.”
The State of Commodities in 2021
Hard and soft agricultural commodities have had a roller coaster ride for much of 2021. Although these products might have peaked, commodities strategists are mixed about whether the bull run is still on in the fourth quarter of 2021.
Corn
In 2021, there have been many developments triggering volatility in the corn market.
According to an exclusive report by Reuters, President Joe Biden and his administration have been considering cutting the country’s biofuel blending requirement. Documents viewed by the newswire highlighted that the Environmental Protection Agency (EPA) would slash blending mandates to 18.6 billion gallons in 2021 and 20.8 billion gallons in 2022. If approved, the move would affect corn farmers who produce the raw ingredients for ethanol.
In South America, Argentina, the sixth-largest corn producer in the world, could see more requirements and restrictions on exports. The Argentine government wants to “intelligently manage export balances” to curb domestic food prices.
Year-to-date, corn futures have surged by about 8 percent.
Soybean
After hitting a nine-year high of $16.67, soybean prices have been in freefall, tumbling 11 percent since July. While it might be challenging to pinpoint a specific circumstance that sent prices plummeting, there have been multiple developments in recent months.
The weather has been one of the key factors for soybean prices. As a result, investors were focused on rainfall in the U.S. Midwest this past summer. According to the National Oceanic and Atmospheric Administration (NOAA), August precipitation totals ranked as the 14th wettest in the 127-year period, coming in at more than three inches above average.
After facing its worst drought in decades, delaying soybean planting and hurting the corn crop, Brazil’s 2021–22 soybean planting has reached 10 percent as rainfall has facilitated soil moisture.
“There was rainfall in a large part of Brazil last week, which favored fieldwork in regions where the planting was already advanced and also allowed the sowing to start in regions where producers were waiting for better humidity conditions,” agribusiness consultancy firm AgRural said in a statement.
A farmer makes a repair to a grain drill while planting soybeans near Dwight, Ill., on April 23, 2020. Scott Olson/Getty Images
In recent weeks, USDA data has shown that soybeans weighed and inspected for export were down by 80 percent year-over-year. China’s soybean imports have also been declining, as low crushing margins and sky-high prices diminished demand in the world’s largest consumer of the bean. This has resulted in Brazil’s soybean exports being projected lower on year, despite Beijing transitioning its acquisitions from the United States to Rio de Janeiro.
Year-to-date, soybean prices are down by 8.5 percent.
Wheat
Even before the recent WASDE figures, global wheat inventories had been showing signs of shrinking in 2021.
Over the past few months, several major markets, including Russia, Canada, and France, have slashed production estimates or exports. Moscow installed an export tax for its wheat shipments as part of efforts to limit food price inflation, raising its shipments duty to $31.4 per tonne.
At the same time, international demand, led by China, has increased. Beijing’s 2020–21 wheat import estimate soared by 140 percent, the highest surge in two decades.
Year-to-date, wheat is up by more than 14 percent.
Relief at the Supermarket?
From higher food prices to scarcity on store shelves, it has been a rough year for shoppers at the local supermarket. Yet despite the bearish tone of the monthly USDA snapshot of the commodities market, some analysts say it could be some time before prices begin to tumble. Soaring fertilizer prices, rising energy costs, and supply chain challenges are all factors that could maintain upward pressure on grocery bills in the coming months.
Andrew Moran
Author
Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of "The War on Cash."
