The US Department of Agriculture (USDA) released its January World Agricultural Supply and Demand Estimates (WASDE) report yesterday [January 12].
US end season corn [maize] stocks have been reduced in line with the smaller production estimates to 39.42MT.
Modest downward cuts to Argentina's corn production from 49MT to 47.5MT have been offset due to increased beginning stock estimates, raised to 4.37MT, up from 2.87MT previously, noted CRM Agri. Brazilian corn production estimates also received modest cuts to previous assessments, down 1MT to 109MT, but the USDA left export and consumption forecasts untouched.
Declines for Argentina and Brazil more than offset increases for China and India.
“Overall, the global corn picture is little changed, bar small deceases to South American production and expected slightly increased imports for China. What provided a shock to markets was the unexpectedly large cuts to US production estimates, providing an overall supportive USDA WASDE, with greater focus on South America over the coming months.”
Bearish start to the year for wheat
The USDA forecast little in the way of wheat output to support a bullish market.
Russian wheat production was increased yet again to 85.3MT, up from the previous 84MT estimate. However, due to export tax implications, exports were lowered to 39MT, said CRM Agri.
“A potential bearish start to 2021/22 and Russian wheat supplies,” commented the UK analysts.
Argentine wheat production estimates were decreased to 17.5MT by the US agency.
That “shouldn’t have been a shock to markets with multiple South American based organizations having been estimating production close to 17-17.5MT for quite some time.”
However CRM Agri warned that agri-commodities market watchers should not underestimate the ability of politics to get in the way of rational supply and demand.
Wheat will continue to be led by the corn market, fully focused on South America, they said.
Slight cut to US soybean output
The USDA marginally reduced domestic soybean production to 112.55MT, down from 113.5MT in December’s WASDE, which combined with an increase to export estimates, reduces US soybean ending stocks further, said the CRM Agri team.
Cuts have been made to soybean production estimates for Argentina, down to 48MT from the previous 50MT. No cuts or changes were made to estimates for Brazil, or Paraguay.
Estimates for soy imports from China have been left unchanged, but, following an increase in production estimates; Chinese ending stocks are estimated at 28.6MT, giving room for reducing or slowing imports, said the analysts.
“With further pressure on US ending stocks, the outlook for South American supply will now be of greater focus.”