The USDA released the latest WASDE report March 8, but markets shrugged it off fairly quickly, according to analysts.
“The interesting thing about it is we didn’t significantly change the numbers all that much — everybody knew where we were at,” said Jerry Gidel, analyst with Midland Research. “There wasn’t any reason to sell it again because markets were all short anyway.”
Gidel said there is “a lot of confusion” as yield reductions in South America are coming in from various estimates.
“The weather was totally crazy for them,” Gidel said. “We’ve had 8 to 10 to 15% yield reductions in spots. Then it turned around and they had 2 million hectares of soybeans that needed to be replanted. That’s not the best season.”
He doesn’t expect South American crop size estimates to grow from this point on, saying much has been priced into the market already.
Gidel pointed to U.S. acreage forecasts that are anticipating more soybeans planted in 2024, and while there is some available acreage, the expectation for 4 million more total soybean acres could be a challenge considering current prices. Some producer surveys Gidel has seen are showing 1.5 to 2 million acre increases, but 4 million is the figure the USDA is looking for.
“The classic 2.5% price relationship might be there with the new crop, but producers don’t always look at that relationship at the elevators,” he said. “Right now, the corn basis in western Iowa is 20 cents less for corn and 30 to 40 cents under for soybeans. We are oversold and we need to have soybeans get more attractive to get the number of acres we need going forward.
“We don’t need the corn acres, to be frank. Those 4 million acres isn’t going to put a dent in our carryover stocks.”
With planting season likely to be early in some areas, drought has yet to be factored in to the 2024 contract prices, Gidel said. He said areas such as northeast Iowa are still in significant drought conditions.
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