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Soybean futures lost headway after the USDA, in its much-watched monthly Wasde crop report, made an larger-than-expected upgrade to its forecast for US stocks at the close of 2023/24.
The Chicago March-24 futures contract, which stood 0.8% higher ahead of the report, traded 0.2% in negative territory in the immediate aftermath.
Corn futures for March-24, after initially baulking at an unforeseen upgrade to the estimate for US carryout stocks, pared some of their losses.
Wheat futures for March-24 traded, an hour after the report, with 2.2% losses, in line with where they were trading in the run-up to the Wasde.
Corn
The USDA raised by 250Kt to 55.2Mt its forecast for US stocks at the close of the season, citing a small cut to the forecast for use in making sweeteners, “based on indicated usage to date”.
The modest stocks upgrade compared with market expectations for a 360kt downgrade.
However, at a global level, the estimate for carryout stocks was cut by 3.2Mt to 322.1Mt, a larger downgrade than traders had pencilled in.
Brazil’s corn crop was downgraded by 3.0Mt to 124.0Mt, a figure in line with market expectations, although remaining well above levels expected by the South American country’s own Conab bureau. Conab earlier on Thursday lowered its forecast by 3.6Mt to 113.7Mt.
Brazil’s 2023/24 corn exports were forecast at 52.0Mt, 2.0Mt below last month’s figure, with Ukraine viewed as picking up the slack. The Ukraine corn export estimate was raised by 2.0Mt to 21.0Mt, although this remains below last season’s 27.1Mt figure.
Soybeans
The USDA raised its forecast for US carryout stocks from 2023/24 by 950Kt to 8.6Mt, an upgrade well ahead of that which traders had expected.
The revision reflected a reduced estimate for US exports, “reflecting the slow pace of shipments through January and strong competition with Brazil”.
In fact, the forecast for Brazil’s exports in 2023/24 was raised by 500Kt to 100.0Mt, even as the harvest estimate was trimmed by 1.0Mt to 156.0Mt.
The USDA attributed the Brazil export upgrade to a “strong year-to-date (October-January) pace” of shipments.
The estimate for world stocks at the close of the season was lifted by 1.4Mt to 116.0Mt, rather than seeing the 2.1Mt downgrade that investors had expected, although this did factor in higher carry-in inventories, on an upgrade to Brazil’s 2022/23 harvest.
Conab earlier cut its forecast for Brazil’s 2023/24 soybean crop by 5.9Mt to 149.4Mt, while reducing its export outlook by 4.3Mt to 94.2Mt.
Wheat
The USDA raised its forecast for US carryout inventories by 280Kt to 17.9Kt, on reduced food use. Traders expected the figure to hold steady.
However, at a global level, the USDA made an unexpected downgrade to its estimate for end-stocks, of 600Kt to 259.4Mt, an eight-year low. The market had pencilled in a 261.1Mt number, according to a Reuters poll.
The revision reflected largely increased food use expectations India, but also an increase of 400Kt to 7.3Mt in feed use in the UK.
Indeed, the USDA made a series of revisions to its UK balance sheet estimates, cutting the harvest-23 production number by 300Kt, but raising the forecast for 2023/24 carryout stocks by 500Kt to 2.4Mt nonetheless on a revised trade balance.
Imports were seen at 2.1Mt, up 100Kt from last month’s forecast, while the export figure was slashed by 1.1mt to 800Kt.
Ukraine was seen as benefitting from the UK export slowdown, a topic explored in CRM Agri’s UK Grain Report on Tuesday.
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• Corn & wheat - US wheat price dip disguises tightening signs • Oilseeds - Funds caught out by turn dry in Argentine weather • Crop Watch - Argentina’s turn drier
In December 2023, we published our 2024 outlook and forecasts. As another year draws to a close, its time to take a look at those forecasts and how accurate they were.
Daily Grain Markets