Soybeans: focus remains on South America
Figure 1: Brazil Soybean – Production (M ton)
The February WASDE usually doesn't bring much volatility to the grains and oilseeds markets. The market's attention will be focused mainly on the South American crops estimates, given that the weather has been more favorable for the Argentine crops and more challenging for the Brazilian crops since the last report.
The average expectation points to a 3M mt reduction in Brazil's soybean production estimate to 154M mt. Argentina is expected to see a slight increase of 1M mt to 51M mt. As a result, world soybean stocks are also expected to fall, with surveys pointing to a reduction of 2.1M mt to 112.5M mt.
Looking at the US figures, there is a chance that the USDA will reduce its export estimate of 1.755 billion by up to 50M bu, as 2023/24 exports so far are down 23% on the previous year.
Corn: a similar story
Figure 2: Brazil Corn – Production (M ton)
Normally, the February report doesn't bring many changes to US estimates, but in Thursday's report, there is a chance of a small increase in the export estimate.
With regard to global figures, the focus will be on production figures from Brazil and Argentina, and to a lesser extent on exports from Ukraine. The average market expectation is that the USDA will reduce its estimate of Brazil's corn production by 2M mt to 125M mt.
As for Argentina, the market expects an increase of 1M mt, from 55M mmt to 56M mt. For world corn ending stocks, the expectation is for a slight tightening, from 325.2M mt to 324.4M mt, but this is still the highest level in six years.
Wheat: another WASDE without major changes
Figure 3: World Wheat - Ending Stocks (M mt)
Wheat estimates are not expected to change much in February, and it's important to remember that Thursday's report will still not have any estimates for the 24/25 harvest. The surveys point to a maintenance of estimates for global ending stocks.
However, two possible changes to look out for are increases in Australia's production estimate and Ukraine's wheat exports. Recent private estimates point to a crop closer to 30M mt in Australia, and Ukraine's exports via the Black Sea are doing better than expected a few months ago.
In the US, changes could come in exports. Total wheat export sales are on pace with the USDA's estimate of 725M bu on 23/24, but shipments have fallen behind and are down 10% on the previous year. Even if the USDA estimate is reached, it will be the lowest export level in more than 50 years.
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