USDA leaves U.S. corn and soybeans unchanged in the March WASDE and only makes slight adjustments to South American production.
Chip Nellinger, Blue Reef Agri-Marketing says this is a disappointment, but the markets are shrugging it off.
USDA put Brazilian soybean production at 155 million metric tons, which is well above Conab’s 149.4 million projection and they’re set to release new estimates on Tuesday. Plus, you have some private estimates well below that. Some analysts say USDA is slow stepping since they’ve had to increase the Brazil production after the fact the last two years, but Nellinger says they also lack boots on the ground.
He says, “You know I just think that historically when it comes to other world numbers, they’re reactionary right? And they’re not usually the ones that are leading the way in the cuts and so I still there are a lot of questions out there. You look at some of the private estimates that are still here recently out of the Southern Hemisphere out of Brazil especially you know you’re talking major differences on both corn and bean estimates.”
In fact, USDA’s Brazil corn forecast, unchanged at 124 million metric tons, is more than 10 million metric tons above Conab. Here the rationale may be that 75-percent of the Brazil corn is second crop, which is just being planted. However, Nellinger says this all makes next week’s Conab estimates even more important to the market.
Nellinger says, “You know the south American numbers may be a little bit disappointing to the market, but I think the market knows and realizes that USDA isn’t the leader when it comes to estimate South Hemisphere crops. We do have Conab out next Tuesday morning and so that honestly in my opinion is going to be more important than what this USDA report told us.”
However, USDA did make one surprising revision raising China’s soybean imports for 2022-23 by 3.7 million metric tons and another 3 million for 2023-24. And this was reflected in lower world soybean ending stocks for soybeans at 114.3, down nearly 2 million from February. World corn carryover was also lowered by 2.5 million metrics tons and wheat by over a half million. Which was also slightly bullish.
USDA raised wheat ending stocks 15 million bushels with lower U.S. exports and China cancelled another 4 million bushels of soft red winter wheat this morning, but the market is higher with a lower dollar.
And cattle hit new highs for the move on the heels of stronger cash, but then set back. So Nellinger says he is concerned this could be a reversal.
