Jan 11 / Alef Dias e Pedro Schicchi

Pre-WASDE Monthly Report - 2024 01 11

January’s report is likely to have two main focuses. On the one hand, we have the US’ final crop numbers, and on the other a developing crop in South America.

As for the first, the market is not expecting too much change from the current numbers. A Bloomberg poll shows analysts’ average at 4,123M bu, a mere 6M bu below the current US production numbers.

The latter is more likely to provide some uncertainty. Private estimates of Brazilian production have been declining and are now in the 150-155 range. Thus, the market expects some adjustment on this line, even if not this big.

At the same time, production in Argentina, currently forecasted at 48M ton, will likely be bigger, though the market does not expect changes this month already.

On corn, the scenario is similar – as usual. Analysts estimate the US’ final crop numbers at the same levels as current USDA estimates (-31M bu).

This same volume is expected to impact ending stocks directly, leaving it a bit tighter than previously – though still at historically comfortable levels.

As for Brazil, the poll also points to lower production. However, given that the main cycle (the winter) is still to be planted, the size of the cuts is expected smaller (~2.5M ton). Argentina’s output is expected unchanged.

In wheat, another calm WASDE seems to be on the way. As harvest is practically concluded in the Southern Hemisphere, Argentina and Australia numbers shouldn’t be adjusted.

The main change will likely come in the global trade flow. Russia exports fell considerably in November, and even though it recovered some in pace in December, it was still a drop YoY – so a cut can be expected here.

Market is not expecting much change in the US’ balance. Exports lost some pace in December, so a cut is not out of question, but it is unlikely.

Even though the WASDE may not bring much volatility, the USDA will two other reports that will be relevant for wheat: the Quarterly Stocks Report and Winter Wheat Seedings, with the latter bringing the first estimates for 24/25 area. Expectations point to slightly looser stocks YoY and a planted area reduction YoY.

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Pre-WASDE Monthly Report - 2024 01 11

Soybeans: market sees lower Brazilian production

Figure 1: Brazil Soybean – Production (M ton)

Corn: cuts also expected in Brazil, but smaller than on soybeans

Figure 2: Brazil Corn – Production (M ton)

Wheat: another calm WASDE on the way

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

Charts Legend

WASDE Commentary — Grains

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