Jan 12 / Alef Dias and Pedro Schicchi

Post-WASDE Monthly Report - 2024 01 12

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"Results of the USDA's January report"

Soybeans: Brazilian production cut, but bearish surprise in US and ARG

Figure 1: Brazil Soybean - Production (M ton)

On soybeans, all eyes were on the Brazilian production, but the US and Argentina’s numbers surprised.

The cut to Brazil’s output, although large, was aligned with the estimates (-4M ton). Additionally, it is interesting to point out that the number (157M ton) is still above the private estimates average (~152-155).

The US final production numbers were closer to the higher end of estimates, due to higher-than-expected yields.

Similarly, Argentina’s production was increased by +2M ton MoM, getting to 50M ton and adding to the bearish tone of the report.

Corn: Higher outputs in the US and China

Figure 2: World Corn – Ending Stocks (M ton)

On corn, USDA also increased US production, while agents expected little change, which set a bearish tone.

Brazil’s crop was trimmed in 2M ton. Though bullish on paper, the change was expected by the market.

However, the biggest surprise came in China’s balance. USDA raised the country’s production in 11M ton, following the country’s official numbers.

However, USDA did not reduce its import estimate, as one would expect in this scenario. In turn, world stocks were elevated by a lot more than expected. Still, we highlight that with more production, China may have less appetite for imported corn, impacting balances in the Americas in the future.

Wheat: Chinese demand incorporated to US’ balance

Figure 3: US Wheat - Ending Stocks (M bu)

Russia and Ukraine contributed to an upward adjustment of almost 2M mt to world production and higher-than-expected global ending stocks in 23/24. Ukraine beginning stocks also added to this bearish tone, with a 2.2M mt increase due to downward revisions to feed and residual use estimates since 2021/22.

Also important to note that exports of both countries were raised. Logistically speaking, it makes sense in Ukraine’s case – given that the country can export more via Odesa ports now. But the 51M mt estimated for Russia seems too optimistic, as it would probably face logistical issue to export such amounts, and its exporting pace is slowing down in the last two months.

Last but not least, its important to mention that the Winter Wheat Seeding report brought a very bullish sign for the next crop, with a 7% drop in US’ planted area.

Charts Legend

WASDE Commentary — Grains

Written by Alef Dias

Written by Pedro Schicchi
Reviewed by Thaís Italiani


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