USDA Reports Review

February WASDE Provides Little New Input

Dana Mantini
By  Dana Mantini , Senior Market Analyst
This chart shows the progression of China soybean imports. For the first time in the last several years, China soybean imports have increased -- perhaps a good sign following the phase-one deal. (USDA graphic)

The February World Agricultural Supply and Demand Estimates (WASDE) report, as is typical, provided little fanfare for grain and soybean markets. Perhaps the most noticeable change was the larger-than-expected increase in the Brazilian soybean crop to a record-large 125 million metric tons (mmt) or 4.59 billion bushels (bb). U.S. ending stocks of soybeans also fell by 50 million bushels (mb), reflecting higher exports, while U.S. wheat stocks dropped by 25 mb. As expected, there were no changes in U.S. production.

Here is a closer look at some of the changes in both U.S. and world numbers from the Feb. 11 report:


While most analysts and traders expected a small decline in U.S. ending stocks, USDA left corn ending stocks unchanged at 1.892 bb. Exports were dropped by 50 mb (not a big surprise), with U.S. corn sales and shipments severely lagging expectations. The 50 mb drop in exports was equally offset by a 50 mb increase in corn used for ethanol.

On the world front, global corn production was raised by 800,000 metric tons (mt), with increases for Ukraine of 300,000 mt and South Africa of 500,000 mt, with a minor reduction in Vietnam. Higher corn exports for South Africa, Ukraine and the European Union were offset somewhat by the lower U.S. exports. The net effect was a drop of nearly 1 mmt in world ending stocks to 296.8 mmt versus 297.8 mmt in January, and compared to 320.4 mmt last year.

South American corn production remained unchanged, with Argentina pegged at 50 mmt and Brazil at 101 mmt -- the same as in January.


U.S. soybean exports were raised by 50 mb to 1.825 bb, likely in response to some phase-one buying expectations, the faster-than-expected pace of exports to date and China's increased crush. The rise in U.S. exports directly translated to an ending stocks number of 425 mb, compared to trade expectations of 448 mb and January's 475 mb ending stocks number. The soybean average price was lowered to $8.75 per bushel, down 25 cents from the January price.

In the world, soybean production, trade and stocks were increased. Perhaps the most notable change was a larger-than-expected production number for Brazil to 125 mmt (4.59 bb) compared to the average trade estimate of 123.8 mmt and January's 123 mmt. The 125 mmt production would be an all-time-record-large crop and was primarily responsible for the rise in world ending stocks to 98.86 mmt -- up 2.2 mmt. That was well above the 97.2 mmt expected and January's 96.7 mmt.

China's soybean imports were raised by 3 mmt to 88 mmt, a likely result of higher crush (86 mmt, up 1 mmt) and perhaps expectations of some of the phase-one import increases. Soybean exports increased for the U.S., Brazil (up 1 mmt to a record-large 77 mmt) and Ukraine.

On the product side, there was a modest decrease in ending stocks of meal to 11.66 mmt from 11.94 mmt, and a minor increase in world soybean oil stocks to 3.41 mmt from 3.34 mmt. In the U.S., soybean oil ending stocks were raised to 1.515 million pounds (mp) from 1.446 mp, with an increase in exports of 200 mp. U.S. soymeal ending stocks fell from 400,000 short tons (st) to 375,000 st.


There were only minor changes to wheat, with U.S. exports raised by 25 mb to reflect the pace of exports. Ending U.S. wheat stocks fell to 940 mb -- the lowest in five years but hardly a game changer. Ending stocks fell by 5 mb in both hard red and soft white wheat, while hard red spring declined by 15 mb.

On the world front, exports were raised by 1.8 mmt, with the EU 1 mmt higher and Kazakhstan up 800,000 metric tons (mt). U.S. exports rose by 500,000 mt, while Canada was reduced by the same amount and Pakistan exports fell by 300,000 mt. Perhaps the most significant world change was an increase of China imports by 800,000 mt to 4 mmt. In the end, the world will still have a record-large ending stocks number of 288.03 mmt.


The most notable change from the Feb. 11 report was probably a larger Brazilian soybean crop than expected. While the report was supportive to beans -- with the March contract finishing 1/2 cent higher -- corn and wheat contracts finished lower. Chicago March wheat plummeted (finishing down 10 cents) but that seemed more related to fund-selling than the neutral report.

With the ongoing coronavirus panic and cheaper South American grain prices until tariffs are waived, it is likely that any major phase-one demand changes are likely to come at a later date. As of Tuesday, U.S. old-crop soybeans can't compete with Brazilian soybeans, also helped by the sharp fall in the Brazilian currency.

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Dana Mantini