Weekly Summary of CRM Agri Analysis & Forecasts
This afternoon saw a slew of data from the USDA in their key January WASDE report.
US winter wheat sowings for the 2024/25 harvest shrank by more than traders had expected, the USDA said.
However, this proved one of the few statistics in a slew of USDA data on Friday which was taken as supportive to prices.
The USDA upgraded estimates for US harvests of both corn and soybeans last year by more than investors had pencilled in, feeding through into larger-than-forecast carryout stocks figures too.
The data spurred declines in Chicago futures, with corn for March-24 trading 2.9% lower after the report, soybeans for March-24 shedding 2.1% and wheat for March-24 down 1.4%.
CRM Agri will unveil more detailed analysis of the data, and its implications for prices, in its monthly forecast report next week.
Corn
The US corn harvest set a record in 2023 by even more than had been thought, with the USDA lifting its estimate for output by 3.7Mt to 369.7Mt.
The revision reflected a yield which, upgraded by 0.15t/ha to 11.13t/ha, also set an all-time high, narrowly exceeding the 2021 result.
Although some of the extra output was mopped up by increased figures for US ethanol and feed demand, the supply boost fed through into a carryout stocks figure for 2023/24 which, at 54.9Mt, was 1.3Mt ahead of market expectations. The USDA trimmed by $0.05/Bu, to $4.80/Bu, its forecast for US farmgate corn prices in 2023/24, a drop of 27% year on year.
At a global level, the USDA lifted its forecast for corn carryout stocks by 10.0Mt to 325.2Mt, contrasting with market expectations of a 2.3Mt downgrade. However, the revision reflected a hike to the estimate for Chinese supplies, on top of the US inventory revision.
These upgrades more than offset a cut of 1.0Mt to 7.0Mt in the stocks figures for Brazil, on a downgrade of 2.0Mt to 127.0Mt in the country’s output estimate “reflecting lower second crop corn area expectations”.
Soybeans
For soybeans too, the USDA raised its estimate for last year’s harvest by more than the market had expected, by 950Kt to 113.3Mt, on a bigger-than-forecast yield upgrade.
With few changes to US use expectations, the extra supply spurred an upgrade to more than 900Kt, to 7.6Mt, in the forecast for 2023/24 carryout stocks. The USDA cut by $0.15/Bu to $12.90/Bu its estimate for the US season-average price.
The USDA raised its forecast for Argentina’s 2023/24 soybean crop too by 2.0Mt to 50.0Mt, although Brazil’s harvest was downgraded by 4.0Mt to 157.0Mt. “Reduced rainfall in the Centre West region and north-eastern states lowered yield potential,” the USDA said.
The revisions all in ended up lifting by 400Kt, to 114.6Mt, the estimate for world soybean stocks at the close of the season, a figure 2.7Mt above that the market had pencilled in.
Wheat
For wheat, the USDA trimmed its forecast for domestic stocks at the close of the season by 300Kt to 17.6Mt.
However, it trimmed its US price outlook by $0.10/Bu, to $7.20/Bu, nonetheless “based on prices received to date and expectations for futures and cash prices for the remainder of 2023/24”.
At a world level, the forecast for major exporters’ stocks was raised by 3.0Mt overall, to 58.7Mt, led by a 2.5Mt increase to 15.3Mt in the figure for EU inventories, seen as swollen by imports from Ukraine.
“Despite the difficulties reaching more distant markets, Ukraine has been able to expand wheat exports to EU member states,” the USDA said.
“Given the strong pace of imports from Ukraine, EU wheat imports are forecast up 2.5Mt this month to 11.0Mt.”
Despite the increases, major exporter stock-to-use ratio sit at decade lows.
Estimates for the UK, including a 14.3Mt harvest figure, were left unchanged.
For 2024/25, the USDA in a separate briefing reported its winter wheat sowings at 13.9Mha – a drop of 1.0Mha year on year, and 370Kha shy of investors’ forecasts.
Soft red winter wheat, as traded in Chicago, led the area decline, with a 13% decrease, compared with 5% shrinkage in acres seeded with hard red winter wheat and with white winter wheat.
