USDA forecasts highest prices for U.S. crops in years amid global boom
U.S. farmers will reap two of their largest corn and soybean crops ever and sell them for the highest average prices since the commodity boom ended several years ago, said the government Wednesday in its first projections of the fall harvest. The USDA also said that global soybean king Brazil would increase its share of the world market at the expense of U.S. exports.
The planting season is in full swing, so the projections in the USDA’s monthly WASDE report are a long-range look at the potential outcome, months away, of the growing season. The projections assume normal weather and yields. Most of the U.S. West is in drought. The USDA designated an additional 52 counties as natural disaster areas due to drought on Wednesday, including 48 of the 53 counties in North Dakota, often the leading wheat-growing state in the nation.
Although it expects smaller exports of the three major field crops, the USDA said this year’s corn, wheat, and soybeans would fetch markedly higher prices at the farm gate than the 2020 crops now on the market — $2.60 a bushel higher for soybeans, for example. A price boom for agricultural commodities began last summer and remains strong despite predictions of bumper crops worldwide in the year ahead.
This year’s corn crop would sell for a season-average $5.70 a bushel, soybeans for an average $13.85 a bushel, and wheat for an average $6.50 a bushel, estimated the USDA. Those would be the highest farm gate prices since 2013 for corn and soybeans and the highest since 2014 for wheat.
The USDA projected a corn crop of 15 billion bushels, the second largest ever; a soybean crop of 4.4 billion bushels, the third largest on record; and a wheat crop of 1.87 billion bushels. Larger plantings and higher yields could boost output of all three crops — corn by 6%, soybeans by 7%, and wheat by 3%.
Soybeans are the most valuable U.S. farm export, accounting for 18¢ of every $1 in sales during calendar 2020, but shipments are expected to contract by 9% in the marketing year that opens on September 1. The U.S. export share of global soybean trade is expected to decline to 33% from the current 36%, said the USDA, because of tight U.S. supplies and rising demand from domestic processors. “Brazil’s share increases from 50% in 2020/21 to 54% in 2021/22,” when this year’s crop goes on the market, said USDA analysts.
Brazil, the world’s largest soybean grower and exporter, was projected to harvest a record 144 million tonnes of soybeans in 2021/22 and export 93 million tonnes. In comparison, the projected U.S. crop of 4.4 billion bushels would be the equivalent of 120 million tonnes, and exports of 2.1 billion bushels would equal 56.5 million tonnes.
Drought is cutting into Brazilian corn production, with both Brazilian forecasters and the USDA paring their estimates. The USDA lowered its forecast of the crop to 102 million tonnes, a drop of 7 million tonnes and a match of the record set last season. CONAB, part of Brazil’s Agriculture Ministry, pegged the crop at 106 million tonnes, down 3 million tonnes from its April estimate because of hot and dry weather in the country’s central and southern corn-growing territories.
In its first harvest estimate for winter wheat, the dominant U.S. variety, the USDA forecast a crop of 1.28 billion bushels, 10% larger than last year. The forecast was based on a survey of growers and spot checks of wheat fields. Winter wheat is used in making bread, pastries, and cakes.