02/11/2022
The soybean market has been the primary focus in the Ag commodities this week, primarily because of the risk of a sharply smaller Brazilian crop, with yet unknown losses in Argentina. Safras & Mercado, another Brazilian consultancy, lowered its production estimate to 127.2 million metric tons today, down from 132.3 mmt previously. The big shocker this week came Thursday, when Brazil's official government agency CONAB dropped its estimate by 15 mmt to 125.5 mmt. Paraguay's crop is said to be 40 to 60% smaller than normal as well, which will reduce supplies flowing in Argentina for crushing, where production estimates are starting to ease lower as well. It is still early in Argentina's crop growing season - equal to the first of August in the Midwest - for development of the soybeans. That gives it plenty of time depending on weather. Unfortunately, forecasters fear that Argentina will continue to see a warm dry bias over the next six to eight weeks.
This week’s WASDE report was not fundamentally supportive for the corn. There were no changes to the US supply and demand, and less loss in South American production than the trade was looking for. Brazil production deceased by just 1 mmt on lower than expected corn yields. Argentina’s corn crop estimate did change. It is interesting to note that the USDA decreased their estimate of corn exported to China. All in all, it was an uneventful WASDE report for the corn.
Wheat tracked with the corn and soybeans this week despite the USDA raising the carryout because of US wheat values being priced out of the export market. The USDA slashed exports by 15 million bushels to bring the export estimate down to 810 million bushels in 21/22. The World S/Ds from the USDA saw only minor changes also. 2.2 mmt were trimmed from production as Syria, Iraq, and other lesser nations saw cuts to their crops. World demand gained .6 mmt even though China cut 1 mmt from wheat feeding. Wheat values are no longer a strong discount to corn and feeding of the grain is in decline. Canada’s feed usage increased 1.7 mmt based on recently released Canadian data.
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