USA- Corn and soybean prices experienced a significant dip following the release of the latest World Agricultural Supply and Demand Estimates (WASDE) report by the US Department of Agriculture (USDA), revealing larger-than-expected supplies in the US.
On the contrary, wheat prices remained relatively stable despite a notable reduction in world inventory expectations, as highlighted by CRM Agri.
The report made public on Tuesday, September 12, had an immediate impact on the commodities market. Chicago corn futures for December 23 saw losses exceeding 2%, prompted by the USDA’s unforeseen upward revision of this year’s US harvest forecast.
Similarly, soybean futures for November 23 declined by over 1.0%, as the USDA not only lowered its expectations for US yield, aligning with market predictions but also cut its US export outlook.
The USDA’s unexpected modest increase in the US corn production forecast for the current year, by 600Kt to 384.4Kt, defied the 3.2Mt reduction anticipated by speculative investors. Though the agency reduced its yield estimate slightly to account for recent Midwest heat and dryness, the decrease of less than 0.1t/ha, settling at 10.91t/ha, was less significant than market projections.
This adjustment was coupled with a surprising increase of 800M acres to 94.9M acres in the estimate for spring sowings. The result was an upgrade of 460Kt to 56.4Kt in the estimate for US corn stocks at the end of 2023/24, contrary to the expected 1.7Mt downgrade.
Regarding soybeans, the USDA lowered its forecast for this year’s domestic soybean yield in line with market expectations. The reduced yield figure led to a 1.6Mt reduction in the US harvest estimate to 112.8Mt.
However, the US export forecast for 2023/24 was also reduced by 950Kt to 48.7Mt, limiting the downgrade to the carryout stocks estimate to less than 700Kt, contrary to market expectations.
In the world wheat market, the USDA’s cut of 6Mt to 787.3Mt in the forecast for world wheat production in 2023/24 marked the first year-on-year decline in five years.
This reduction reflected diminished expectations for harvests in key producers such as Argentina, Australia, Canada, and the EU, all of which are major exporters that significantly influence world prices.
The downgrade in production was accompanied by an increase in wheat usage for feed due to quality setbacks in the EU and China.
This led to a reduction of 7Mt to 258.6Mt in the forecast for world wheat stocks at the close of 2023/24, reaching an eight-year low.
Despite the bearish trend in corn and soybean prices, wheat prices remained resilient, primarily due to concerns arising from the downward adjustment of world wheat production.
The markets are carefully watching these developments as they could have far-reaching implications for the global agricultural landscape.