USDA projects fewer U.S. corn exports in latest report

Today, the USDA released the latest Global Agricultural Supply and Demand (WASDE) report.

2022/2023 US END STOCK

The WASDE report has placed 2022/2023 US corn ending stocks at 1.342 billion bushels. This is above the trade estimate of 1.305 billion bushels and the USDA’s February estimate of 1.267 billion bushels.

For soybeans, US ending inventories were 210 million bushels, below trade expectations of 220 million bushels and the USDA’s February estimate of 225 million bushels.

The USDA put US ending wheat inventories at 568 million bushels, reflecting no change from February’s estimate of 568 million bushels and below the trade expectation of 573 million bushels.

2022/2023 WORLD EQUITIES

The USDA has placed world corn ending stocks at 296.5 million metric tons (mmt) versus trade expectation of 293.2 mmt. Last month the USDA estimate was 295.3 mmt.

For soybeans, global ending stocks are estimated at 100 million tons versus trade expectation of 100.3 million tons. The USDA February estimate was 102 mmt.

For wheat, the USDA has set global ending stocks at 267.2 million t. This is below trading expectation of 269.4mmt and February estimate of 269.3mmt.

2022/2023 ARGENTINA AND BRAZIL CROP PRODUCTION

For corn, Argentina’s production is set at 40mmt, below trade expectations of 43.4mmt and last month’s estimate of 47mmt.

Brazil’s corn production is estimated at 125mmt versus trade’s expectation of 124.9mmt and last month’s estimate of 125mmt.

For 2021/2022, Brazil and Argentina together produced an estimated 165.5 million tons of corn. As of now, it is estimated that they will produce 0.5 mmt less in 2022/2023.

For soybeans, Argentina is estimated to be producing 33mmt versus trade expectation of 36.7mmt and February estimate of 41mmt.

Brazil’s soybean production is set at 153 million tons versus trade expectation of 152.9 million tons and last month’s estimate of 153 million tons.

For 2021/2022, Brazil and Argentina together produced an estimated 173.4 million tons of soybeans. As of now, it is estimated that they will exceed 2022/2023 by 12.6 million t.

MORE FROM USDA

“The outlook for 2022-23 US corn this month is of lower exports and larger ending inventories,” the USDA report said. “Exports are down 75 million bushels, reflecting the hitherto poor pace of sales and shipments despite relatively competitive US prices. Excluding other usage changes, ending inventories are up 75 million bushels from last month.

“Changes in US soybean supply and usage for 2022/23 include higher exports, lower displacement and lower ending inventories compared to last month’s report. Soybean exports are up 25 million bushels to 2.02 billion based on higher-than-expected shipments through February. Soybean degradation is reduced through a small reduction in native soybean meal disappearance combined with a higher extraction rate. As higher exports more than offset lower demand, ending inventories will be reduced by 15 million bushels to 210 million.”

Regarding the reduced estimate of Argentina’s corn and soybean crops, the USDA refers to hot and dry weather conditions.

TRADE RESPONSE

Naomi Blohm, senior market advisor at Total Farm Marketing, says today’s report was “largely as expected.”

“The USDA confirmed most of the points challenged by the [agricultural] industry in recent weeks,” she says. “The USDA slashed Argentina’s corn and soybean production numbers, bringing them in line with most industry expectations…Ending stocks for US grain remain historically low. 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 on soybeans.

“US stocks have not only fallen, they have fallen more than the market was expecting,” he says. “Coupled with an expected smaller Argentine crop, we might see some strength in new beans to buy a few acres of corn.

“While corn production for Argentina was cut back beyond what the market was expecting, US stocks rose more than the market was expecting. We believe this could put further pressure on corn prices in the near term.

“It’s no secret that conditions for winter wheat in the US are abysmal, but the reality is there is still plenty of wheat in the world. We would expect a strong base of falling carton prices to occur to keep wheat moving domestically, but on export programs all bets are off.”

“The rise in corn closing stocks is likely to take corn below the $6.22 support,” said Al Kluis, managing director of Kluis Commodity Advisors. “The smaller Argentine crop is bullish and the crop will likely be smaller again next month.”