Nov 8 / Alef Dias e Pedro Schicchi

Pre-WASDE Monthly Report - 2023 11 08

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"Perspectives for the USDA's November report"

Soybeans: small changes are expected in the US, but what about SA?

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

Soybeans are in a transition moment. November marks the end of the adjustments to the US supply side this year. The market expects little change from October, which is valid, given not much has changed since then for the country. However, when the expectations range is narrow, small changes can have a big price impact.

Regarding South America, CBOT prices have already started to reflect the poor weather prospects in Brazil. However, that does not mean that the agency will change its estimates. Over the past 10 years, the USDA only changed Brazil’s production numbers twice in November. Not impossible, but unlikely.

Argentina is a different story. The country’s production was changed in four out of the last six Nov reports. If that’s the case, we expect an increase.

Corn: a similar story

Figure 2: US Corn - Ending Stocks (M bu)

In corn, the scenario is similar. In the last report of the year to change US supplies, the market expects very little variation from October.

When it comes to Argentina, adjustments to production are not as likely as for soybeans, but they also happen. We expect more soybeans and less corn in the country, given the local price and cost scenario.

As for Brazil, the market is already pricing a much smaller 23/24 crop than USDA’s current numbers. However, like for soybeans, changes are not that likely looking at the history

Wheat: world stocks keep getting tighter as dryness reigns in the south

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

In wheat, the poor weather scenario for the southern hemisphere crops will likely keep dragging down world ending stocks – and probably more than market is currently expecting.

When it comes to Argentina, there’s already a gap of 3M mt between USDA current estimates and the most pessimistic local forecast – the Rosario Exchange just lowered its estimate to 13.5M mt.

For Australia, USDA’s numbers already contemplate a huge drop in yields compared to last season. Nonetheless, Australia recorded the driest October in more than 20 years due to the El Niño. Considering some of the lowest yields in this period, there’s still space for additional cuts to the Aussie output – which could come under 20M mt.

The market is not expecting much change in the US’ balance, but exporting activity is still very slow, opening space for a cut.

Charts Legend

WASDE Commentary — Grains

Written by Alef Dias

Written by Pedro Schicchi
Reviewed by Thaís Italiani


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