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Elevated Feed Costs Likely to Persist

May 12, 2021

Even as corn and soybean production is poised to rise during the coming marketing year, historically low beginning stocks and sustained demand are expected to keep markets tight, according to USDA’s World Agricultural Supply and Demand Estimates (WASDE) report released today. This tightness will translate into elevated concentrate prices that are likely to threaten dairy producer economics in coming months.

USDA estimates that farmers will produce 14.99 billion bushels of corn in the 2021- 22 marketing year, a 5.7% increase vs. the prior year. Even though the production estimate was lower than analysts projected, decreased export expectations left ending stocks an estimated 250 million bushels higher than last year, as the United States cedes a greater share to other global suppliers. USDA forecasts exports at 2.45 billion bushels, a decrease of 325 million bushels or 11.7% compared to the prior production year. Global corn supplies are expected to be strong, with most global corn exporters projected to increase production, especially Brazil and Ukraine where supplies are expected to grow by 16 million metric tons (MMT) and 7.2 MMT, respectively. Soybean production is also expected to rise as high prices incentivize expanded plantings.

Soybean production for the year is currently forecast at 4.405 billion bushels, up 270 million bushes or 6.5% compared to the prior year. Like corn, however, total use is anticipated to contract, principally due to lighter exports, leaving ending stocks at an expected 140 million bushels, which although slightly higher than this year’s 120 million bushels remain significantly lower than historical norms. South America’s exporters are expected to grow production substantially, which will offset lower exports from the United States, even as global imports are anticipated to rise to 172.71 MMT, due in part to sustained demand from China.

Tight balance sheets are expected to translate into higher prices, with USDA forecasting that the projected price farmers will receive for corn will jump $1.35/bu. from last year to $5.70/bu., the highest price since the 2012-13 marketing year.



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