Oct 11 / Pedro Schicchi and Thaís Italiani

Pre-WASDE Monthly Report - 2023 10 11

The US soybean 23/24 production should remain at the center of the market’s attention in USDA’s October report. Though the upper and lower limits are quite wide, the market survey’s average is pretty similar to last month’s number. On the one hand, soybean conditions declined late in the crop, which could mean yields may be adjusted downwards. On the other, the latest private estimates point to numbers close or slightly higher than USDA’s current estimate.

In any case, one must note that historically both area and yields vary by quite a margin in October (around 1% and 2% MoM, respectively). Thus, given that the market is expecting small changes this report has the potential for surprises.

As always, the scenario for corn is similar, but not identical to beans. The US balance should also be in the spotlight. However, we should expect smaller changes in area and yield because of the differences in crop calendars.

Similarly, the market is estimating US production almost unchanged, while private estimates of yield are close/slightly above USDA’s current levels.

Looking at other regions, USDA’s forecast of Ukrainian exports has been unchanged even as the deal expired. Although other non-Black Sea routes are being used, this could still trigger some changes. Conab issued a production estimate that is much smaller than USDA’s current numbers for Brazil in 23/24. However, changing South America’s new crop production is not the USDA’s usual behavior at this point of the year.

On the wheat side, USDA’s Small Grains Summary brought higher production for the US which is going to be incorporated in the next WASDE report. Additionally, the stocks report brought higher-than-expected numbers, meaning consumption in the country might be slower than anticipated.

Looking outside the US, world stocks are already pretty tight, given the adjustments done to several countries (like Argentina, Australia, Canada, and the EU). However, the agency’s estimate for Russia – the globe’s top producer and exporter – is still a few million tons smaller than local consultancies.

As such, there is a chance that we see more availability in October if the agency decides to adhere to these local numbers, as some of the cuts that were expected already took place in September.

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Pre-WASDE Monthly Report - 2023 10 11

Soybeans: there’s space for the market to be surprised

Figure 1: US Soybean - Production (M bu)

Corn: Neutral/Bearish

Figure 2: US Corn - Production (M bu)

Wheat: Neutral

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

Charts Legend

WASDE Commentary — Grains

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