Nov 9 / Alef Dias and Pedro Schicchi

Post-WASDE Monthly Report - 2023 11 09

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"Results of the USDA's November report"

Soybeans: 

Figure 1: US Soybean - Ending stocks (M bu)

The major change in soybeans’ balance was the increase in US production. Although the change was slight, it led to ending stocks close to the higher end of the expected range.

With the change, world production would reach 400M ton for the first time. South America was left untouched for the most part. As the prices have been rallying on Brazil’s poor weather, the market is likely to pay less attention to the USDA numbers during the next few months.

The bullish news came from China. With changes in the old crop (22/23) balance, the country’s carryover was reduced by 3M ton, leading to slightly lower world stocks.

Corn: 

Figure 2: US Corn - Production (M bu)

On corn, USDA also increased production, which is now forecasted at a whopping 387M ton (15.2B bu), a record high for the country. In response, all demand lines were increased.

South America’s balances, once again, remained largely the same.

However, Ukraine’s production and exports were increased based on harvest results and the slightly higher flow seen in Odesa Ports since the establishment of the “Ukrainian corridor”.

The higher stocks in both the US and the Black Sea steered world stocks towards the higher end of the expected range - 315M ton, close to the highest estimate.

Wheat: 

Figure 3: World Wheat - Ending Stocks (M ton)

On wheat’s side, Russia’s production increase was the biggest surprise of the report, bringing bearish pressure to wheat markets. Even though local consultancies were already pointing to a +90M mt crop, the lag in adjusting the 22/23 crop numbers made analysts skeptical of a severe adjustment in 23/24.

With an additional supply of 5M mt in Russia, the cuts to Argentine (-1.5M mt) and Indian (-2.95M mt) only offset the impact on world stocks, but didn't tighten it, as it was expected.

US’ ending stocks also came looser than expected, as exports were kept unchanged while imports were increased and food usage was reduced – July-September wheat used in milling was the smallest for the quarter since at least 2014.

Charts Legend

WASDE Commentary — Grains

Written by Alef Dias
alef.dias@hedgepointglobal.com

Written by Pedro Schicchi
pedro.schicchi@hedgepointglobal.com
Reviewed by Thaís Italiani
thais.italiani@hedgepointglobal.com
www.hedgepointglobal.com

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