Market Attention Turns South In USDA'S February Wasde Report

By Todd Hultman

On Wednesday, Feb. 8, at 11 a.m. CST, USDA will issue the next World Agricultural Supply and Demand Estimates (WASDE) report. The usual ground will be covered, but most of the market's attention will likely turn to South America where Brazil's record soybean crop is being harvested and Argentina is struggling with drought.

CORN

In the January report, USDA surprised markets with a lower-than-expected corn production estimate of 13.73 billion bushels (bb) and Dec. 1 corn stocks of 10.809 bb, a total that was 378 million bushels (mb) below analysts' expectations. In the next report, on Feb. 8, we're not likely to see bullish surprises of that magnitude, unless they come from South America.

Dow Jones' survey of 16 analysts expects USDA to increase its estimate of U.S. ending corn stocks in 2022-23 from 1.242 bb to 1.264 bb. If analysts are correct, it will still be the second-lowest corn total in nine years. Dow Jones doesn't specify a reason for the higher estimate, but a good guess would be that analysts expect another reduction in the corn export estimate, currently sitting at 1.925 bb, which is down 22% from a year ago. As of Jan. 26, U.S. corn export commitments are down 43% from a year ago, hurt by increased competition from Brazil.

SOYBEANS

Like corn, USDA's January report also had a bullish impact on soybean prices after USDA lowered its 2022 production estimate to 4.276 bb and found Dec. 1 soybean stocks 123 mb lower than analysts had expected. Dow Jones' survey expects USDA to keep its January estimate of U.S. ending soybean stocks untouched at 210 mb, and there seems to be little challenge to the notion that soybean supplies are headed to their lowest U.S. finish in seven years.

WHEAT

After USDA reported 1.280 bb of Dec. 1 wheat stocks in the Jan. 12 report, there is little doubt U.S. wheat supplies are on track for their lowest ending in 15 years. Wednesday's new estimates are not apt to show much change, but analysts in Dow Jones' survey expect USDA to increase its estimate of U.S. ending wheat stocks from 567 mb to 579 mb, a total that is also the lowest in 15 years.

There seems to be disagreement among 2022-23 world wheat production estimates with USDA expecting 781.31 mmt (28.71 bb) versus a higher view of 796 mmt (29.25 bb) from the International Grains Council (IGC). USDA may have some tweaks in Wednesday's report, but it will be interesting to see if USDA makes any significant adjustments to narrow the gap with the IGC's numbers. Wednesday's export estimates for Russia and Ukraine will also be noticed. Russia has been an active seller of wheat lately, and Russian inspectors are being accused of deliberately slowing down the inspection process, limiting the amount of grain ships leaving Ukraine. USDA's estimate of world ending wheat stocks apart from China was last seen at 124.31 mmt (4.57 bb) in January, the lowest total in 14 years.