USDA Project Less Soybean Crush

USDA released today the latest World Agricultural Supply and Demand Estimates (WASDE) report.

The WASDE report pegged the U.S. 2022/2023 corn ending stocks at 1.267 billion bushels. This is above the trade’s estimate of 1.266 billion bushels and USDA’s January estimate of 1.242 billion bushels.

For soybeans, the U.S. ending stocks were 225 million bushels, exceeding both the trade’s expectation of 211 million bushels and USDA’s January estimate of 210 million bushels.

USDA pegged the U.S. wheat ending stocks at 568 million bushels, slightly above January’s estimate of 567 million bushels but below the trade’s expectation of 576 million bushels.

2022/2023 WORLD ENDING STOCKS
USDA pegged the world’s corn ending stocks at 295.3 million metric tons (mmt.) vs. the trade’s expectation of 294.7 mmt. Last month, USDA’s estimate was 296.4 mmt.

For soybeans, the world ending stocks are estimated at 102 mmt., in line with the trade’s expectation of 102 mmt. USDA’s January estimate was 103.5 mmt.

For wheat, USDA pegged world ending stocks at 269.3 mmt. This is above the trade’s expectation of 268.6 mmt. and the January estimate of 268.4 mmt.

2022/2023 ARGENTINA AND BRAZIL CROP PRODUCTION
For corn, Argentina’s production is pegged at 47 mmt., below the trade’s expectation of 48.5 mmt. and last month’s estimate of 52 mmt.

Brazil’s corn production is estimated at 125 mmt. vs. the trade’s expectation of 125.2 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 surpass that total in 2022/2023 by 6.5 mmt.

For soybeans, Argentina is estimated to produce 41 mmt. vs. the trade’s expectation of 42.3 mmt. and January’s estimate of 45.5 mmt.

Brazil’s soybean production is pegged at 153 mmt. in line with the trade’s expectation of 153 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 20.6 mmt.

“This month’s 2022/23 U.S. soybean outlook is for lower soybean crush and higher ending stocks,” USDA says in the report. “Soybean crush is forecast at 2.23 billion bushels, down 15 million from last month on lower domestic soybean meal disappearance and a higher soybean meal extraction rate. With soybean exports unchanged, ending stocks are forecast at 225 million bushels, up 15 million.”

Concerning the decrease in global soybean ending stocks, USDA says “global 2022/23 soybean supply and demand forecasts include lower production, crush, and ending stocks. Global production is reduced five million tons to 383.0 million on lower crops for Argentina and Ukraine.”

USDA pegs the increase in U.S. corn ending stocks on decreased ethanol production.

Concerning global corn ending stocks, USDA pegs the reduction primarily on production issues.

“Foreign corn production is down, with a decline for Argentina partially offset by increases for the Philippines and Vietnam,” USDA says in the report. “For Argentina, production is cut based on reductions to both area and yield.”

TRADE REACTION
Al Kluis, managing director of Kluis Commodity Advisors, says today’s report wasn’t too surprising.

“I was surprised to see U.S. soybean ending stocks move higher with the current strong crush profits for soybean processing plants,” he says. “I think the USDA did the right thing moving the crop size lower for both Argentine corn and soybeans, and unless weather improves, it is likely to move lower again next month.”

Nick Tsiolis, founder of Farmer’s Keeper, characterizes the report as “neutral with a few surprises.”

Concerning the reduced production estimates for South America, he says, “the reality is even with lower estimates, their production is going to be large. The question is, how quickly can those bushels get to market to satisfy demand or will the U.S. hang on as an origin for a longer period of time.

Source: https://www.agriculture.com/news/crops/usda-projects-higher-soybean-ending-stocks