Sep 11 / Alef Dias and Pedro Schicchi

Pre-WASDE Monthly Report - 2023 09 11

New WASDE, but the focus continues the same: US yields. The peak of uncertainty in soybeans has passed, but there is still water to go under this bridge. The market expects lower yields, resulting in around -63M bu less production However, the trade also sees ending stocks 40Mbu lower, thus the difference would come from a cut in demand.

Our view is slightly bearish toward yield. Though a cut is likely, but we currently sit at the higher end of the market’s range. However, we are not as pessimistic on total demand. On the one hand, exports are indeed lagging, on the other strong margins signal that crush could perform better than currently estimated. Additionally, USDA is conservative when changing demand in early estimates.

Similarly, US yields are likely to be the highlight for corn. However, the spotlight may be shared with Ukraine.

Given the differences in crop calendar, US corn yields have even less uncertainty than soybeans’ after August. As such, the expected changes are smaller, at least in percentage. Once again, although we find a cut likely, our own estimates are closer to the higher end of the market’s range, making us a bit bearish. This time, however, we are not as confident in the strength of the US domestic market, and export sales are also low, so a trim in demand is more likely.

When it comes to Ukraine exports, the flow has decelerated a lot since the end of the Grain Corridor Deal – and USDA’s estimates haven’t been adjusted since then, so it can happen this month.

A similar scenario to the one witnessed in August WASDE’s will likely repeat this month – slightly bullish fundamentals with a bearish market reaction.

Since July’s report, world ending stock were cut by 5.1M mt – the lowest level since 15/16 – and prices are now below levels seen prior to that report. For tomorrow’s report, on average, analysts are expecting modest trims to US and World Ending stocks.

Canada, Argentina and Australia are some of the top exporters that may have significant cuts to their production estimates, due to the challenging weather faced by these countries’ crops.

The greatest adjustment to the upside now could be in the Russian production and exporting figures, but as it happened in 22/23, the USDA likely will not follow local consultancy’s estimates.

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Pre-WASDE Monthly Report - 2023 09 11

Soybeans: Neutral / Bearish

Figure 1: US Soybean - Yield (bu/ac)

Corn: Neutral/Bearish

Figure 2: US Corn - Yield (bu/ac)

Wheat: Neutral

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

WASDE Commentary — Grains

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