Evening Report | June 8, 2021

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Preparing for Thursday’s USDA reports… USDA is expected to trim its old- and new-crop corn ending stocks forecasts in Thursday’s Supply & Demand Report. The corn market will also pay close attention to USDA’s Brazilian corn crop estimate, though its widely expected that figure will remain well above private crop estimates. Traders anticipate the old- and new-crop soybean ending stocks will increase slightly from last month. For wheat, the focal point will be the updated winter wheat crop estimate, which is expected to climb from last month.

The following estimates are from Reuters with the exception of the cotton figures, which are from Bloomberg

Expectations for
U.S. Carryover

Corn – billion bushels

 

2020-21

2021-22

Average est.

1.207

1.423

Range

1.132-1.257

1.282-1.507

USDA May

1.257

1.507

 

Soybeans – million bushels

 

2020-21

2021-22

Average est.

122

146

Range

110-150

127-206

USDA May

120

140

 

Wheat – million bushels

 

2020-21

2021-22

Average est.

869

783

Range

832-901

702-899

USDA May

872

774

 

Cotton – million bales

 

2020-21

2021-22

Average est.

NA

2.99

Range

NA

2.30-4.05

USDA May

3.30

3.10

 

Expectations for
Global Carryover

Corn – MMT

 

2020-21

2021-22

Average est.

280.82

289.20

Range

276.00-285.00

285.00-294.00

USDA May

283.53

292.30

 

Soybeans – MMT

 

2020-21

2021-22

Average est.

87.14

91.22

Range

86.00-92.00

89.00-94.10

USDA May

86.55

91.10

 

Wheat – MMT

 

2020-21

2021-22

Average est.

294.41

294.49

Range

293.30-295.23

290.00-300.00

USDA May

294.67

294.96

 

Cotton – million bales

 

2020-21

2021-22

Average est.

NA

90.14

Range

NA

88.00-92.03

USDA May

93.16

90.99

 

Brazilian Production

Soybeans – MMT

Average est.

136.16

Range

135.73-137.00

USDA May

136.00

 

Corn – MMT

Average est.

97.32

Range

95.00-100.50

USDA May

102.00

 

Argentine
Production

Soybeans – MMT

Average est.

46.61

Range

45.00-47.50

USDA May

47.00

 

Corn – MMT

Average est.

47.04

Range

46.00-47.50

USDA May

47.00

 

Expectations for
U.S. Wheat Production

All wheat – billion bu.

Average est.

1.892

Range

1.846-1.973

USDA May

1.872

 

Winter wheat – billion bu.

Average est.

1.312

Range

1.276-1.393

USDA May

1.283

 

HRW wheat – million bu.

Average est.

760

Range

723-826

USDA May

731

 

SRW wheat – million bu.

Average est.

333

Range

317-350

USDA May

332

 

White winter wheat – million bu.

Average est.

216

Range

195-250

USDA May

220

 

 

Biden supply chain 'strike force' to target China on trade… The U.S. will create a new “strike force” to combat unfair trade practices, the Biden administration said today. The office of the U.S. Trade Representative, led by Katherine Tai, will head up the strike force that will propose enforcement action the U.S. could take alone and efforts it could take with other countries against trade practices that have weakened major supply chains. The trade strike force also would review trade agreements as possible tools for bolstering a cooperative approach with partners and allies to build flexibility into shared supply chains. The focus of the task force is likely to be China.

The administration said decades of U.S. public and private policy have contributed to supply chain weaknesses that became apparent in the Covid-19 pandemic and economic crisis. The administration's actions are the result of an assessment of four product areas: semiconductor manufacturing and advanced packaging; large capacity batteries; critical minerals and materials; and pharmaceuticals and active pharmaceutical ingredients. The administration also said it will have strategies within a year for six industrial bases of U.S. economic and national security: defense, public health and biological preparedness, information and communications technology, energy, transportation, and agriculture and food production.

 

Parana River basis critically short of moisture… As we’ve previously reported, water levels on the Parana River and its tributaries are significantly reduced due to the prolonged drought across central Brazil. The Parana River Basin encompasses parts of six states – Minas Gerais, Goias, Mato Grosso do Sul, Parana, Sao Paulo, Santa Catarina and the Federal District. Besides impacts to shipments of corn and soybeans, there are 57 reservoirs within the basin and the hydroelectric dams in the Parana River basin produce the greatest percentage of Brazil’s electricity. 

Low waters on the Parana River are also impacting exports at the Port of Rosario in Argentina. In the past, Brazil and Paraguay have released water from the Itaipu Dam to increase the flow of the Parana River. But South American Consultant Dr. Michael Cordonnier says the Brazilian government may be reluctant to agree to a similar diversion of water this year since it is already warning of possible electricity shortages due to the low water level at the dam.

 

Corn production in Paraguay also impacted by dry weather… Cordonnier says crop production in the normally highly productive area of eastern Paraguay, right across the Parana River from western Parana, Brazil, was disappointing given persistent drought. The Director of the consulting firm DASAGRO estimates that corn yields in Paraguay will be down 9%.  Cordonnier estimates the country’s corn production at 9.2 MMT, which would be down 700,000 MT from last year, despite planted acreage being up 19%.

 

U.S. trade deficit narrows in April… The U.S. trade deficit narrowed by 8.2% in April to $68.9 billion from a record $75 billion the previous month. Exports of U.S. goods and services rose 1.1% to $205 billion while imports declined 1.4% to $273.9 billion in April. Through the first four months of the year, the U.S. trade deficit totaled $281.7 billion, up 50.5% from the same period in 2020.

The Commerce Department reports April exports of goods at $145.3 billion and exports of industrial supplies and materials at $52.2 billion were both the highest on record. April imports of capital goods at $63.7 billion were also the highest on record.

 

Cargill plans new corn processing plant… Cargill Inc will build a plant in Iowa to turn sugars from corn into replacements for chemicals that can be used to make spandex and biodegradable plastics. Cargill and Germany-based HELM will ferment corn-based sugars to produce a 1,4-butanediol, or BDO, in the country's first commercial-scale, renewable facility for the product. It can replace chemicals made from fossil fuels like petroleum, reducing greenhouse gas emissions, Cargill said.

The plant will be completed in 2024 at the existing Cargill corn-processing complex in Eddyville, Iowa. It will use about 30,000 bu. of corn per day. That is roughly 10% of the use of the corn-processing operation in Eddyville, which includes ethanol.

 

Earmarks worth $5.7 billion in highway bill headed to markup... The highway bill that the House Transportation and Infrastructure Committee will mark up Wednesday will include $5.7 billion in earmarks — a little more than one-third of the $14.9 billion members requested. House Democrats will attach 1,473 local project requests — 1,067 from Democrats, 403 from Republicans and three bipartisan projects — to the surface transportation reauthorization bill, according to a substitute amendment of the legislation released on Monday. It was “not an easy nor quick task” to vet the requests, said Committee Chair Peter DeFazio (D-Ore.), but it will “give viable projects the funding they need to get across the finish line.”

 

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