The U.S. Department of Agriculture chose to kick the can down the road in the March World Agricultural Supply and Demand Estimates Report, leaving ending stocks figures as they were from February with corn at 1.502 billion bushels, soybean stocks at 120 million bushels and wheat at 836 million bushels.
For soybeans, USDA left crush and exports projected at 2.20 billion bushels and 2.25 billion bushels, respectively, and so ending stocks remain at 120 million bushels. However, this is down 405 million from last year’s record. Jim McCormick with Agmarket.Net said USDA is unlikely to make revisions to the U.S. balance sheets until May.
“They’ll likely wait until we get the first new crop production and ending stocks estimates to cushion the bullishness of the old crop supplies. I think USDA will eventually have to take the soybean ending stocks below pipeline supplies at sub-100 million bushels,” he said.
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He said USDA will likely offset that with an increase in soybean imports and domestic crushers will likely have to import some soybeans from Brazil or Canada to make it through the summer when the new crop comes to market.
Where USDA did make some adjustments was in the world numbers, albeit slight. World ending stocks on soybeans were raised 300,000 metric tons to 83.7 million metric tons, which was actually a bit of a surprise, as the trade was guessing there would be a decrease in global carryover.
The agency pegged Brazilian soybean production at 134 million metric tons, which is a 1 million metric tons increase from last month.
“If there was any surprise in the report it was Brazil’s soybean crop estimate, considering all the production issues they’ve had tied to too much rain in the central part of the country. That is slowing the harvest to levels not seen in 10 years,” McCormick said.
As of March 4, Ag Rural estimated harvest at only 35%. There are also private reports of quality issues starting to come out of Brazil. Meanwhile, Argentina production was lowered by a half million metric tons to 47.5 million metric tons, which is more realistic with the ongoing dryness in the country which has trimmed yields. Argentina also saw a drop in crop ratings recently to only 10% good to excellent on the soybean crop verses 44% last year.
South American corn production was left unchanged by USDA with Brazil production at 109 million metric tons and Argentina at 47.5 million metric tons. That was confusing considering Argentina’s dry pattern and lower crop ratings at only 25% good to excellent. Plus, the second crop Brazilian corn planting pace is well behind average due to the slow soybean harvest, which means a third of the crop may pollinate in the heat of summer which will cut yield potential.
Global wheat ending stocks were lowered by 3 million metric tons to 301.2 million metric tons. Australia’s production was raised to a record 33 million metric tons, surpassing the previous 2016-17 record of 31.8 million. World 2020-21 consumption is increased 6.6 million tons to 775.9 million, mostly on higher feed and residual use for China. China’s domestic corn prices remain at a premium to wheat at over $9.50 per bushel despite China selling of large amounts of old-crop wheat stocks out of reserves in January and February. This is expected to further heighten China’s 2020-21 wheat feed and residual use, raised 5 million tons to a record 35 million.
The market will now await USDA’s Prospective Plantings and Quarterly Grain Stocks Reports at the end of March.