Unexpected revisions in latest USDA reports: Grain market daily

• UK feed wheat futures (May-23) closed at £233.50/t yesterday, down £0.60/t from Wednesday's close. The Nov-23 contract closed at £228.00/t, seeing no change in price over yesterday’s session.
• UK prices followed continental wheat prices down, as cheap Russian exports and forecasts of a large Australian crop pressured grain prices ahead of the release of yesterday’s USDA World Agricultural Supply & Demand Estimate report.
• Paris rapeseed (May-23) gained €3.25/t yesterday, ending the session at €574.75/t. The Nov-23 contract closed at €575.25/t, up €0.75/t over the same period.
• Global oilseed markets were supported following a 12Mt cut in Argentina’s soyabean production estimate to 37Mt by the Rosario Grain Exchange due to the ongoing drought. Furthermore, yesterday the Buenos Aires Grain Exchange also revised Argentina’s production down to 41Mt from the 48Mt previously estimated, while the USDA have estimated the crop at 45.5Mt (read more below).

Yesterday, the USDA released three key reports, the latest World Agricultural Supply and Demand Estimates (WASDE), US quarterly grain stocks as at 01 December, and the area planted to winter wheat for harvest 2023.

The key watchpoint from the WASDE was to see if there had been any changes to South American production, notably Argentina given the extreme drought conditions. Further to that, if there were any revisions to the US’ maize and soyabean production for 2022.

A pre-report Reuters poll estimated that US quarterly stocks of wheat, maize and soyabeans were all expected to be lower as at 01 December than a year earlier. Finally, winter wheat plantings in the US were expected to be at a seven-year high. So, were yesterday’s reports as expected?  

WASDE

Wheat

In the latest WASDE, overall, the 2022/23 global wheat outlook is for increased supplies, exports, consumption, and stocks. There are notable supply increases from increased Ukrainian and European exports, supporting a global rise in consumption.

Maize

The maize outlook in this month’s report shows lower production, greater trade, and reduced stocks. Argentina saw the greatest loss to production. However, China saw a rise in output and Ukraine saw higher exports due to the continued grain corridor deal in the Black Sea region.

The report pegged Argentina’s maize production for the 2022/23 season at 52.00Mt, in line with average trade estimates (51.97Mt), and down 3Mt from December’s estimate.

More surprisingly in Brazil, due to the dry conditions in southern parts of the country, maize production was pegged at 125.00Mt, falling short of the average trade estimate of 126.34Mt, and down 1Mt from December’s report.

The US maize production figure was also unexpectedly slashed to a three-year low, now pegged at 348.75Mt, down 5.09Mt from last month’s estimate with the cut in harvested area larger than anticipated.

Soyabeans

Soyabean supply and demand forecasts include higher stocks, but lower production, crush, and trade. The lower production is again largely down to Argentina, though is partly offset by higher production in Brazil and China.

Argentina’s 2022/23 production forecast was pegged at 45.5Mt. This is lower than the average trade estimate of 46.71Mt, and down 4Mt from December’s estimate. On the other hand, Brazilian production was revised up at 153.00Mt, slightly higher than trade estimates (152.28Mt) and up 1Mt from December’s figure.

US soyabean production was also unexpectedly cut by 1.89Mt to 116.38Mt, after the USDA estimated that the 2022 harvest was smaller than originally predicted, due to crops struggling late in their development. 

US stocks

Quarterly stocks of maize, soyabeans and wheat in the US were all lower than analysts had anticipated.

Trade estimates had suggested wheat stocks would be down 2% from a year earlier, though yesterday’s report showed stocks to be down by 7%. US maize stocks were expected to see a 4% decline on the year, but the report showed a 7% fall. Finally, soyabeans were expected to be down 0.1% on the year but were estimated down 4% by the USDA.

These cuts to both US production and quarterly stocks put a bullish spur in markets yesterday as Chicago maize futures (May-23) gained $5.61/t, closing the session at $263.58/t. Moreover, Chicago soyabean (May-23) futures climbed $8.36/t yesterday, closing at $558.17/t.

US winter wheat plantings

The report shows that US farmers planted the largest winter wheat area in eight years at 14.95Mha, up 11% from 2022. However, its speculated that the dry conditions in which the crop was planted could impact harvest yields (Refinitiv). It’s important to note that this large area will not yet be incorporated into the WASDE as it falls into the 2023-24 marketing year. However, a larger wheat crop would help pull US wheat ending stocks up from their projected 15-year low in 2022/23.

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