USDA Reports Preview
USDA's WASDE Focus Turns to South America Crop Conditions
On Wednesday, Feb. 9, USDA is expected to make small reductions to ending stocks estimates of U.S. corn and soybeans for 2021-22. Traders will likely be most interested in USDA's new estimates of South America's corn and soybean crops after both have been suffering dry conditions for over a month.
CORN
USDA's February World Agricultural Supply and Demand Estimates (WASDE) report is traditionally one of the quieter ones of the year, happening at a time when the Northern Hemisphere is hibernating through winter and traders' attention is turned to South America. This WASDE report is unusual in that it finds March corn prices trading near their highest level in over eight years for a March contract, and there are plenty of drought concerns in southern Brazil and Argentina to keep traders interested.
On Jan. 12, USDA estimated Brazil's corn crop at 115.0 million metric tons (mmt) or 4.53 billion bushels (bb) and Argentina's crop at 54.0 mmt or 2.13 bb. According to Dow Jones' survey of 20 analysts, those estimates are expected to come down to 113.0 mmt (4.45 bb) for Brazil and to 52.1 mmt (2.05 bb) for Argentina -- both reasonable targets still at risk of going lower. Keep in mind, Brazil's larger, second corn crop has yet to be planted and La Nina conditions remain in place, contributing to the drier weather pattern for southern Brazil. USDA's estimate of world ending corn stocks is expected to be lowered from 303.1 mmt to 300.3 mmt (11.82 bb), up 3% from a year ago.
For the U.S., Dow Jones' survey expects a small reduction in ending corn stocks, from 1.540 bb to 1.515 bb. Given the smaller crops expected down South, the likely adjustment will come from an increase in corn's export estimate. There is also room for a higher estimate of ethanol production, but with ethanol inventory at its highest level in nearly two years, USDA will probably leave the ethanol estimate untouched.
SOYBEANS
As with corn, much of the attention in Wednesday's report for soybeans will also be pointed South. Several private crop estimates for Brazil's soybeans have been coming in lower than USDA's January estimate of 139.0 mmt (5.11 bb). Dow Jones' survey expects USDA to lower the estimate for Brazil to 133.0 mmt (4.89 bb), less than last year's 138.0 mmt.
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For Argentina, USDA is expected to lower the soybean crop estimate from 46.5 mmt to 44.2 mmt (1.62 bb). The Buenos Aires Grain Exchange recently dropped its estimate to 42.0 mmt (1.54 bb). Dow Jones expects USDA to reduce its estimate of world soybean stocks from 95.20 mmt to 91.30 mmt (3.35 bb), but that figure represents midseason stocks for South America. USDA's actual ending stocks estimate for Brazil on Jan. 31, 2022, is just 55 million bushels, an extremely tight situation.
Here in the U.S., USDA is expected to lower the ending soybean stocks estimate from 350 million bushels (mb) to 314 mb, and demand increases could come from both crush and export estimates. The crush values of meal and oil remain historically high in relation to soybeans and should support crush demand, possibly all season long. Export sales and shipments of U.S. soybeans are down 23% from a year ago but are likely to firm with crop estimates shrinking down South.
WHEAT
As with corn and soybeans, the February WASDE report is not usually a game-changer for wheat, but there is more interest in the wheat market this year with spot prices trading near their highest levels in eight years or more and Russian troops threatening to invade Ukraine.
Amid this potentially volatile backdrop, Dow Jones' survey expects USDA to slightly increase its estimate of world ending wheat stocks, from 279.95 mmt to 280.40 mmt (10.30 bb). What won't be addressed in Wednesday's report is any estimate of new wheat crops in 2022-23, which is still being threatened by drought in North America.
For the U.S., Dow Jones' expects a slight increase in USDA's ending wheat stocks, from 628 mb to 630 mb. U.S. wheat exports have been especially sluggish in 2021-22 and are down 23% from a year ago. USDA may not be in a hurry to reduce its export estimate Wednesday after cutting exports by 15 mb last month, but there is room for another reduction.
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Given the attention on this year's South American crops and uncertainty of damage from adverse weather, there is plenty of room for surprises in Wednesday's numbers from USDA. Join DTN's webinar at 12:30 p.m. CST Wednesday, Feb. 9, as I discuss USDA's latest estimates and what they mean for market prices. I'm also glad to answer any questions.
DTN also offers a rebroadcast link later for your listening convenience.
Register here for Wednesday's WASDE report webinar: https://ag.dtn.com/…
| WORLD PRODUCTION (million metric tons) 2021-22 | ||||||
| Feb | Avg | High | Low | Jan | 2020-21 | |
| CORN | ||||||
| Argentina | 52.1 | 53.5 | 51.0 | 54.0 | 50.5 | |
| Brazil | 113.0 | 116.1 | 110.0 | 115.0 | 87.0 | |
| SOYBEANS | ||||||
| Argentina | 44.2 | 46.5 | 43.0 | 46.5 | 46.2 | |
| Brazil | 133.0 | 137.0 | 126.5 | 139.0 | 138.0 | |
| U.S. ENDING STOCKS (Million Bushels) 2021-22 | ||||||
| Feb | Average | High | Low | Jan | 2020-21 | |
| Corn | 1,515 | 1,608 | 1,440 | 1,540 | 1,235 | |
| Soybeans | 314 | 350 | 182 | 350 | 257 | |
| Wheat | 630 | 653 | 603 | 628 | 845 | |
| WORLD ENDING STOCKS (million metric tons) 2021-22 | ||||||
| Feb | Avg. | High | Low | Jan | 2020-21 | |
| Corn | 300.3 | 303.0 | 294.0 | 303.1 | 292.2 | |
| Soybeans | 91.3 | 94.6 | 86.0 | 95.2 | 99.9 | |
| Wheat | 280.4 | 282.4 | 276.0 | 280.0 | 288.8 | |
Todd Hultman can be reached at todd.hultman@dtn.com
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