Argentina suffered a series of downgrades, thanks to dryness damage to its crops, although the Wasde was kinder to Brazil and, especially, Australia.

Wheat

The USDA laid bare the diverging fortunes of Argentina and Brazil.

While the forecast for Argentina’s exports in 2022-23 was cut by a further 1.0Mt to an eight-year low of 6.5mt, following its drought-reduced harvest, Brazil, blessed by a bumper crop, received an upgrade of 500Kt to 4.4Mt in its export forecast. Brazil, historically a major wheat buyer, is now expected to see net imports of 1.2Mt this season, the lowest in 34 years.

Australia’s wheat harvest was also upgraded, by 1Mt to 39.0Mt, close to the Abares estimate earlier this week, with the export estimate upgraded by 500Kt to 28.5Mt, also a record high.

Revisions to northern hemisphere countries were few, although the Kazakh crop was upgraded by 2.4Mt to an 11-year high of 16.4Mt.

Corn

Forecasts for corn exports from both the second-ranked exporter, the US itself, and the third biggest, Argentina, both suffered downgrades.

The US cut, of 1.7Mt to 47.0Mt for 2022-23, reflected a “poor pace of sales and shipments to date despite relatively competitive US prices”, the USDA said. This after merchants earlier in the season focused logistical endeavours, limited by low river levels for Mississippi barges, on soybeans rather than corn.

The Argentine export figure was cut by 7Mt to 28.0Mt, a reflection of expectations for a drought-reduced harvest (see chart below).

The revisions increase the reliance of importers on Brazil, for which the export estimate was held at 50Mt, and Ukraine, for which the forecast was lifted by 1.0Mt to 23.5Mt as volumes continue to flow through the Black Sea corridor.

Soybeans

The forecast for Argentina’s dryness-threatened soybean crop was cut by 8.0Mt to a 14-year low of 33.0Mt, a bigger downgrade than investors had expected, although in line with CRM agri expectations within our analysis sent to clients earlier today. This was reflected in an export number reduced by 800Kt to 3.4Mt.

However, this was offset by increases to the forecast for Brazilian exports, by 700Kt to 92.7Kt, and to US exports, by 680kt to 54.8Kt “based on higher-than-expected shipments through February”.

The forecast for the US crush, by contrast, was trimmed on reduced ideas for domestic demand for high priced soymeal. Nonetheless, the overall impact was a downgrade to the estimate for US carryout stocks to a seven-year low of 5.7Mt.

Market reaction

Wheat prices set fresh lows on both sides, sunk by expectations that the Ukraine grain export corridor will be extended, with the USDA’s Wasde providing traders with few distractions.

Chicago wheat futures for May-23 fell 1% to hold around their weakest levels since September 2021, amid reports that Turkey was “working very hard” to maintain the Black Sea grain export corridor, which is up for renewal on March 18. Antonio Guterres, the UN secretary general, underlined the “critical importance” of rolling over the deal.

Against flat currency markets, Paris wheat futures for May-23 fell 1.2% to record a fresh one-year low, with UK feed wheat for May-23 slipping 1.1%, also to a one-year low.

Paris rapeseed proved more affected by the Wasde, which lifted the forecast for EU imports. The May-23 lot shed 1.2% to its weakest since October 2021, despite gains elsewhere in the oilseeds sector.

Chicago soybeans for May-23 added 0.3%, supported by a bigger-than-expected downgrade to the forecast for US stocks at the close of 2022-23, with soyoil for May-23 rebounding as the USDA in the Wasde cut its forecasts for carryout inventories in major exporters Argentina and Brazil, while lifting expectations for US consumption.