Today USDA released the latest World Agricultural Supply and Demand Estimates (WASDE) report.
2022/2023 U.S. ENDING STOCKS
The WASDE report pegged the U.S. 2022/2023 corn ending stocks at 1.342 billion bushels. This is above the trade’s estimate of 1.305 billion bushels and USDA’s February estimate of 1.267 billion bushels.
For soybeans, the U.S. ending stocks were 210 million bushels, below the trade’s expectation of 220 million bushels and USDA’s February estimate of 225 million bushels.
USDA pegged the U.S. wheat ending stocks at 568 million bushels, reflecting no change from February’s estimate of 568 million bushels and below the trade’s expectation of 573 million bushels.
2022/2023 WORLD ENDING STOCKS
USDA pegged the world’s corn ending stocks at 296.5 million metric tons (mmt) vs. the trade’s expectation of 293.2 mmt. Last month, USDA’s estimate was 295.3 mmt.
For soybeans, the world ending stocks are estimated at 100 mmt vs. the trade’s expectation of 100.3 mmt. USDA’s February estimate was 102 mmt.
For wheat, USDA pegged world ending stocks at 267.2 mmt. This is below the trade’s expectation of 269.4 mmt and the February estimate of 269.3 mmt.
2022/2023 ARGENTINA AND BRAZIL CROP PRODUCTION
For corn, Argentina’s production is pegged at 40 mmt, below the trade’s expectation of 43.4 mmt and last month’s estimate of 47 mmt.
Brazil’s corn production is estimated at 125 mmt vs. the trade’s expectation of 124.9 mmt and last month’s estimate of 125 mmt.
For 2021/2022, Brazil and Argentina combined are estimated to have produced 165.5 mmt of corn. As of now they are estimated to produce 0.5 mmt less in 2022/2023.
For soybeans, Argentina is estimated to produce 33 mmt vs. the trade’s expectation of 36.7 mmt and February’s estimate of 41 mmt.
Brazil’s soybean production is pegged at 153 mmt vs. the trade’s expectation of 152.9 mmt and last month’s estimate of 153 mmt.
For 2021/2022, Brazil and Argentina combined are estimated to have produced 173.4 mmt of soybeans. As of now, they are estimated to surpass that in 2022/2023 by 12.6 mmt.
MORE FROM USDA
“This month’s 2022/23 U.S. corn outlook is for lower exports and larger ending stocks,” says USDA in the report. “Exports are reduced 75 million bushels reflecting the poor pace of sales and shipments to date despite relatively competitive U.S. prices. With no other use changes, ending stocks are up 75 million bushels from last month.
“U.S. soybean supply and use changes for 2022/23 include higher exports, lower crush, and reduced ending stocks compared with last month’s report. Soybean exports are raised 25 million bushels to 2.02 billion based on higher-than-expected shipments through February. Soybean crush is reduced on a small reduction in domestic soybean meal disappearance combined with a higher extraction rate. With higher exports more than offsetting lower crush, ending stocks are reduced 15 million bushels to 210 million.”
Concerning the reduced estimate of Argentina’s corn and soybean crop USDA cites hot and dry weather conditions.
TRADE REACTION
Naomi Blohm, senior market advisor with Total Farm Marketing, says today’s report was “mostly as expected.”
“The USDA acknowledged most points questioned by the [agricultural] industry in recent weeks,” she says. “The USDA did a dramatic cut to Argentina corn and soybean production numbers, putting them in line with most industry expectations…ending stocks for U.S. grains remain historically tight. All eyes are now on South American production and the March 31 planting intentions report.”
Nick Tsiolis, founder of Farmer’s Keeper says the report is bullish for soybeans.
“Not only did U.S. stocks fall, they fell more than the market expected,” he says. “Coupled with an expected smaller Argentinian crop we could see some strength in new crop beans to buy some acres from corn.
“While corn production was cut for Argentina beyond what the market expected, the U.S. stocks went up more than the market expected. We believe that this could put further pressure on corn prices in the short term.
“It is no secret that winter wheat conditions in the U.S. are abysmal, but the reality is that there’s still a lot of wheat in the world. We would expect strong basis with falling board prices will have to occur in order to continue moving wheat domestically, but all bets are off in terms of export programs.”
“The increase in corn ending stocks is likely to take corn below support at $6.22,” says Al Kluis, managing director of Kluis Commodity Advisors. “The smaller Argentine crop is bullish and the crop will likely be smaller again next month.”
