Fundamentally Speaking

Last week CONAB, the official Brazilian statistical agency that is usually about as conservative as the USDA in adjusting Brazilian crop sizes, pared Brazilian row crop output and overseas sales projections.

They pegged total corn output at 112.3 million tonnes (mt) which is 2 mt below USDA's projection in the March WASDE, and 2021/22 corn exports at 35 mt while the USDA Brazilian corn export projection was unchanged at 43 mmt which is 315 million bushels (mb) above CONAB.

In beans, they pegged soybean production at 122.8 mmt compared to 125.5 mt last month, but more importantly this is 4.2 mmt below USDA's projection in the March WASDE, while they project 2021/22 bean exports at 80.2 mmt vs USDA at 85.5 mmt which is 187 mb higher than the CONAB projection.

The Rosario Grain Exchange meanwhile lowered their Argentine corn production forecast to 47.7 mmt vs 53 mmt for USDA and lowered their Argentina 2021/22 soybean production forecast 0.5 mmt to 40.0 mmt vs USDA at 43.5 mmt.

The CONAB figures and those from the Rosaria Grain Exchange indicate Argentine and Brazilian corn and bean output projections well below those of the USDA and even more so on the export side.

Last week the USDA increased this year's corn exports by 75 mb and beans by 40 mb in the March WASDE report with more gains likely for 2021/22 season that will draw down ending stocks even more, but the impact from a far lower South American crop and the dislocations resulting from the Russia-Ukraine conflict implies USDA Feb Outlook 2022/23 corn export projection at 2.350 bb and soybean estimate at 2.150 bb woefully low.

Along these lines, this chart shows new crop sales on the books as of the first week in March for corn, soybeans, and wheat in million bushels on the left-hand axis and as percent of the February USDA Ag Outlook Forum export projection on the right-hand axis.

Note that the marketing year for wheat starts June 1 and that for corn and soybeans starts September 1.

Before the conflict in the Black Sea region broke out, soybeans were attracting a lot of attention as the South American shortfall prompted a lot of interest in U.S. soybeans for the upcoming marketing year, especially from China.

Export sales on the books as of the first week of March for the 2022/23 season are the highest ever for this date at 281 mb, topping the 228 mb seen in the 2011/12 marketing year.

That season the 2012 USDA Ag Outlook Forum pegged bean exports that year at 1.575 bb, so 14.5% of that total had already been sold, the highest percent ever topping this year's 13.1% given last month's Ag Forum projected 2022/23 bean exports at 2.150 bb.

Corn sales on the books for next year at 75.9 mb are the second highest ever for this time of year next to the 87.9 mb in the 2013/14 season but are just 3.2% of last month's 2.350 bb projection.

Finally, wheat sales continue to lag both for this and next marketing year with total sales on the books for the marketing year beginning June 1 a mere 25 mb, a very low figure and just 2.9% of the USDA Outlook Forum projection.

It's still early but so far it appears that importing nations seem more eager to procure new crop U.S. soybeans due to production woes in South America than they do for new crop U.S. corn and wheat even with likely loss of crop potential and export availability out of Russia and Ukraine.

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