USA – The United States Department of Agriculture (USDA) has cut its estimate for South American corn production citing prolonged droughts in Argentina and Brazil, the region’s most of the major production areas.
The cuts were indicated in USDA’s World Agricultural Supply and Demand Estimates (WASDE) January summer crop report.
For Brazil, USDA estimates total corn production for marketing year (MY) 2022/23 at 125.0 million metric tons (MMT), down 1.0 MMT (1 percent) from December, but up from last year’s crop by 9.0 MMT (8 percent).
Total harvested area is estimated at a record 22.7 million hectares (Mha) up 0.9 Mha (4 percent) from last year and estimated yield at 5.51 tons per hectare, down 1 percent from last month, but 3 percent higher than last year’s yield.
However, for Argentina, the cut was higher than expected as USDA pegs cut for 2022-23 at 3Mt and an estimated corn production of 52Mt. The report left the country’s wheat crop which is nearing the end of harvest at 12.5Mt.
However, according to Lachstock Consulting, a market research analysis firm, “ The world ending stocks estimates were considered slightly bullish for corn, slightly bearish for soybeans and neutral for wheat,”
In the report, Corn and soybean prices rallied after the release while wheat struggled to gain much momentum after the much bigger than anticipated area was planted.
The estimates by USDA have its wheat production and export figures unchanged from December, but increased domestic consumption saw the US ending stocks reduced.
However, in the global metric, USDA increased production in Ukraine and the EU, while unexpectedly leaving Russian and Australian production unchanged, leading to a small increase in global production and ending stock estimates.
For instance, the Ukraine estimate was lifted 500,000t to 21Mt, while the EU figure added 400,000t to take it to 134.7Mt.
The cut on the US corn production estimate was attributed to lower harvested area which, according to Lachstock consulting, that outcome was a surprise to the market.
US soybeans were also a surprise with a lower harvested area and a lower national average yield which was below the range of pre-report estimates.
USDA’s estimates for China’s 2022-23 wheat and corn imports are unchanged at 9.5Mt and 18Mt respectively, and Russian wheat exports at 43Mt are also steady.