Ag Markets Correcting Lower To Start The Week

USDA Leaves China Corn Imports Unchanged

• The USDA projection for corn to China was 24 million tonnes, The same as in March
• US corn export commitments to China for this season are already in excess of 23 million tonnes.
• Ukraine shipped 1.267 million tonnes of corn to China in March, bringing the marketing year total to 6 million tonnes.
• China raised its forecast for corn imports to 22 million tonnes from 10 million previously, and commented supply/demand is in balance.
• USDA raised its forecast for China’s feed wheat use by 5 million tonnes to 40 million.
• The agency increased it’s projection of US exports to other countries by 75 million bushels in this month’s report.

FBN’s Take On What It Means For The Farmer:  China’s increased feed demand is generally a given, but how it is resolved remains a question. Substitution of wheat and rice for corn and soymeal are likely happening, but may not be able to make-up the shortfall. With five months to go, and combined US and Ukraine export commitments to China already above 30 million tonnes, it’s likely China’s total demand forecast will be increased. China’s demand along with that of other origins is expected to continue to support export prices. 

Bean Oil Supported By Biofuel Use. 

• As the administration implements its clean energy plan, demand for feedstocks from renewable fuel producers is expected to surge. 
• Renewable diesel production is expected to increase almost five-fold to 2.65 billion gallons by 2024, requiring an additional 17 billion pounds of inputs.
• There could be a  feedstock deficit 13billion pounds by 2024 as more processing capacity starts up.
• Demand for soybean oil alone is expected to exceed supply by 2023, due to an estimated increase in demand of 8 billion pounds.
• USDA shifted 400 million pounds of biodiesel use to food/feed/industrial (FFI) in last week’s report.
• The USDA will change the report format next month and display a composite figure for soyoil use in all biofuels, rather than just biodiesel.

FBN’s Take On What It Means For The Farmer: Food customers in need of bean oil have also needed to bid up prices because of the growth in use for renewable and biodiesel. The recent run higher has brought new renewable producers to near breakeven, has rationed exports and kindled some imports, which have helped stabilize prices.  However, the increased demand is expected to result in high-priced domestic feed stock prices and will be a factor supporting higher soybean prices.

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