Mar 8 / Alef Dias and Pedro Schicchi

Post-WASDE Monthly Report - 2024 03 08

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"Comments about the results of USDA's report"

Soybeans: Brazilian production cut by less than expected, but prices failed to move

Figure 1: Brazil Soybean - Production (M ton)

Brazilian soybean production fell (-1M ton) but by less than expected (-3M ton). However, the country’s exports were increased by 3M ton at the expense of crush and ending stocks.

In turn, Chinese imports were increased by the same 3M ton. US and Argentina’s balances were kept untouched.
In general, the report did not provide the market, with enough evidence to move either way, in particular spec funds, which are currently very short.

Still, even though it was not the most exciting report, it wasn’t without relevant changes either. Nevertheless, prices failed to move significantly. Why?

The market is likely in “wait mode” for March 28’s Prospective Planting report, when US farmers will have a say on how much grains they intend to plant.

Corn: Brazil takes the spotlight

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

Not the most eventful WASDE for corn either. Similar to soybeans, the US’ corn balance was kept unchanged. The changes in South America, though present, were not too out-of-the-expected.

Argentina’s production was increased by 1M ton, while market expected stability in the numbers, causing exports to also be increased.

The most interesting change (which drove the world stocks down) came from Ukraine. Despite the lower production, given the still 7% unharvested area, the country’s efforts to increase grains exports through the Black Sea are paying off, with corn exports surpassing the levels seen last year in the first two months of the year. Consequently, Ukraine had a 2.5M mt cut to its ending stocks.

Wheat: more production with tighter stocks

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

With marginal adjustments in some production numbers, it was quite a calm WASDE for wheat. In the US balance, exports were reduced by 15M bu, given the still slow exporting pace seen lately, leading to slightly looser ending stocks – while the market wasn’t expecting a change.

World production was raised due to the expected adjustments in Australia, Russia, and Argentina. However, it was partially offset by reductions for the EU and Serbia, while the higher feed and residual use for the EU, Kazakhstan, and Indonesia led to a marginal tightening in world ending stocks – below market’s median estimate.

Also important to note that, Ukraine wheat exports were raised 1M mt, as they have been performing even better corn exports – coming above the 5-year highs in the past 2 months.

Charts Legend

WASDE Commentary — Grains

Written by Alef Dias

Written by Thaís Italiani


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