MarketsFarm — Updated supply/demand data from the U.S. Department of Agriculture were slightly bearish for grains and relatively neutral for soybeans, although there were no real surprises, according to an analyst.
“There were no fireworks out of this report,” said Terry Reilly of Futures International in Chicago.
World numbers put some pressure on wheat futures, he said, with the projected world wheat carryout coming in at the high end of trade expectations at 279.95 million tonnes. Projected U.S. wheat carryout for the 2021-22 marketing year, at 628 million bushels, was up by 30 million from the December estimate and also at the high end of expectations.
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Seeded U.S. winter wheat area for the 2022-23 crop was estimated at 34.4 million acres, which would be up by two per cent on the year.
For both soybeans and corn, USDA raised its domestic ending stocks projections. The soybean carryout was up by 10 million bushels from December, at 350 million bushels, while corn was up by 47 million from December, at 1.54 billion bushels.
Both numbers were in line with expectations, although Reilly said the lack of a cut to soybean exports by the government agency was somewhat surprising.
Adjustments to production estimates out of South America were another feature of Wednesday’s reports, with drought conditions in Brazil and Argentina cutting into crop prospects there.
Reilly described the eight million-tonne cut to the combined soybean production out of Brazil and Argentina as “aggressive” and supportive for prices. The government agency pegged Brazil’s soybean crop at 139 million tonnes, which would be down by five million from the December forecast. Argentina’s soybean crop was pegged at 46.5 million tonnes, from 49.5 million previously.
Corn production in Argentina was down by 500,000 tonnes from December, at 54 million, while the Brazilian corn crop was revised down by three million tonnes, at 115 million.
With the January reports out of the way, “we’ll just remain in a sideways trading pattern over the short term for beans and corn,” said Reilly.
“Wheat has maybe some upside if the U.S. weather fails to improve in the central and southern Great Plains, where excessive drought is occurring.”
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
