- HEADLINES: WASDE cuts to Argentine 2023 corn/soy crops combined 15 million mt: US corn exports cut 75 million bu, soybean exports raised 25 million bu; How low is low for Argentine crops?
- Chicago ag markets are mixed following March WASDE Report. WASDE cut its estimate of Argentine soybean production by a record 8 million to 33 million mt and lowered corn by 7 million to 40 million mt. In total, Argentine summer row crop production fell by 15 million mt, a record for both crops combined. The Argentine drought has been dire and further crop falls are anticipated as acres are abandoned. From here forward, every tonne of soybean crop that is lost will come directly from crush as exports cannot be cut much below 3.2 million mt and imports above 7.25 million mt will be nearly impossible logistically. If the Argentine 2023 soybean crop is 27-28 million mt as feared, this would slash their crush down closer to 30 million mt.
- Brazil’s soybean harvest was left at 153.00 million mt which means that world soybean end stocks were pulled down to 100 million mt, just 1 million above last year. The smaller Argentine crop will boost US 2022/23 soybean exports and drop stocks to pipeline levels amid record crush margins. Spot soybean futures will find support under $15.00 amid tightening cash supplies into summer.
- The USDA lowered US 2022/23 corn exports by 75 million bu to 1,850 million and raised soybean exports by 25 million to 2,015 million bu. The US 2022/23 soybean crush rate was cut by 10 million to 2,220 million bu with the result being 210 million bu of 2022/23 soybean end stocks. Such soybean end stocks are seen as near pipeline, the bare minimum needed in the US at the end of the crop year. We doubt that US corn exports will fall further due to the sharp drop in the Argentine corn crop due to drought. And 2023/24 corn exports will be nudged upwards with support noted around $5.60/Bu basis December corn.
US Crop Production (bu/acre & billion bu)
Corn Soybeans
Yield Production Yield Production
2021/22 176.7 15,074 51.7 4,465
2022/23 Feb USDA 173.3 13,730 49.5 4,276
2022/23 Mar USDA 173.3 13,730 49.5 4,276
S American Crop Production (million mt)
Corn Soybeans
Argentina Brazil Argentina Brazil
2021/22 49.5 116 43.9 129.5
2022/23 Feb USDA 47 125 41 153
2022/23 Mar USDA 40 125 33 153
US End Stocks (billion bu)
2021/22 2022/23 2022/23
Feb USDA Mar USDA
Corn 1,377 1,267 1,342
Soybeans 274 225 210
Wheat 698 568 568
World End Stocks (million mt)
2021/22 2022/23 2022/23
Feb USDA Mar USDA
Corn 305.69 295.28 296.46
Soybeans 99 102.03 100.01
Wheat 271.45 269.34 267.2
- The US wheat balance sheet was left completely untouched which makes sense given relatively strong exports, compared to USDA’s projected 775 million bu. World wheat data leans bearish but rising exporter stocks/use has been digested via the recent collapse in values. Aussie production was lifted another million tons to a record 39 million mt. Aussie exports were raised only 500,000 mt amid logistical restraints. Kazakhstan’s 2022 wheat crop was increased an unexpected 2.4 million mt (17%) to 16 million mt, and it was this that pushed 2022/23 exporter wheat stocks/use to 14.4% vs. 13.8% in Feb but vs. 15.3% a year. However, WASDE lowered carry in wheat stocks by 5 million mt lowering 2022/23 world wheat stocks to just 267 million mt, the lowest since the 2016/17 crop year.
- World wheat exportable supplies are adequate and will be used as feed due to the shortage from Argentina. This is no place to be bearish of wheat ahead of a new Northern Hemisphere growing season.
- The midday GFS weather forecast is consistent with the overnight forecast in the persistence of hot/dry weather across Argentine crop areas. There maybe a few spits of rain, but most totals will be less than 0.15” and won’t do much to help crops that have been suffering for the past 6 weeks of acute drought. Any showers that start next Tuesday/ Wednesday favour La Pampa and Southern Buenos Aires. High temperatures will range from the mid 80’s to the lower 100’s. Crop maturity is being pushed by the drought such that late March and April weather will decline in importance.
- RGDS in S Brazil will share in the hot/dry outlook with limited rain for the next 2 weeks. High temperatures will hold in the 90’s with limiting cooling for filling corn.
- The big question is how low is low for Argentine corn/soy production. Can the Argentine soybean crop fall to 25-27 million mt. It is the abandonment of acres that is the reason for the sharp fall in Argentine crops. A corn crop of 34-38 million mt is not unreasonable. The Argentine ag economy is in shambles amid 2 years of drought. Argentine farmers face financial ruin and will hold onto crops in the hope of rising prices. We now doubt that Chicago breaks can be sustained.