August USDA Reports
August marks the first USDA crop production estimates based on farmer surveys, and those estimates are included in the monthly supply/demand numbers. Previous production estimates are based upon trend-line yields.

We saw big changes in the corn balance sheet, as the U.S. average corn yield estimate was cut to 174.6 bushels per acre, down from 179.5 bu/ac, which resulted in a 415 million bushel cut to the production estimate. That cut was a surprise to the market, as was the projection for a 14.8 billion-bushel corn crop. Beginning stocks for 21-22 were cut 35 million bushels.  Some of that decline was offset by a decrease in the export estimate, but carryout for 21-22 was pegged at 1.242 billion bushels, down 200 million bushels from last month. However, with supplies falling more than use, ending stocks were pegged down 190 million bushels to 1.2 billion. The season-average on-farm price was raised 15 cents to $5.75/bushel.

Total rice production was pegged at 197.4 million cwt, as yields were slashed 76 pounds to 7,544 pounds per acre. All rice imports were lowered by 1 million cwt, while exports were increased 91 million cwt, as higher long-grain exports more than offset lower medium- and short-grain exports. Sales to Iraq were cited by USDA as a reason for the increase in long-grain exports. Domestic and residual use was lowered by 2 million cwt to 151 million cwt on smaller crop size and reduced imports. Projected 21-22 ending stocks were reduced by 4 million cwt to 37.3 million, down 15% from 20-21. The all-rice season-average farm price was increased 10 cents to $14.50/cwt.

Changes in the soybean balance sheet were less dramatic, with production forecast to be 4.34 billion bushels, down 66 million on slightly lower yields. The yield projection is 50 bushels per acre, down 0.8 bushels from last month. Soybean crush was reduced 20 million bushels and exports were reduced by the same amount. Ending stocks for 21/22 were pegged at 155 million bushels. The on-farm average price was unchanged from last month at $13.70.

U.S. cotton production was pegged at 17.3 million bales. Exports were reduced 200,000 bales due to the smaller supply, and ending stocks were reduced 300,000 bales, or 17% of expected use. The U.S. season-average price for upland cotton was raised 5 cents per pound to 80 cents, the highest level in a decade.

In the August report, USDA reduced their total meat production forecast for 2021 on lower expected beef and pork production. The decline in beef production reflects lighter expected carcass weights due to a higher expected proportion of non-fed cattle being slaughtered through the end of the year. The pork production forecast is reduced on a slower expected pace of slaughter for the remainder of the year and lighter carcass weights. Broiler production was raised from last month as higher-than-expected second quarter production more than offset a lowered second half-forecast. Beef imports were raised on recent trade data and expected firm demand from several key trading countries. Beef export forecasts for 2021 were lowered on slowing global demand for U.S. beef. Broiler and egg export forecasts for 2021 were raised.

Milk production forecasts for 2021 and 2022 were reduced from last month on lower expected dairy cow numbers. For 2021, the fat basis import forecast was raised on firm demand for butterfat and cheese imports, while the fat basis export forecast was reduced. The skim-solids basis import forecast for 2021 was raised primarily on higher imports of milk proteins while the export forecast was raised primarily on stronger expected sales of whey and lactose. For 2022, the fat basis import forecast is raised on continued strong import demand for butter and butterfat, while the fat basis export forecast is raised as U.S. butter prices are expected to be competitive.

For 2021, butter, cheese, nonfat dry milk and whey prices are forecast lower on relatively weak demand. Dairy product prices are also reduced for 2022 reflecting continued relatively soft domestic demand and higher forecast beginning stocks. The 2021 and 2022 Class III and Class IV price forecasts are reduced from the previous month on lower forecast dairy product prices. The 2021 all milk price is forecast lower at $17.95 per cwt. The all-milk price forecast for 2022 is $17.85 per cwt.