3 Supply and Demand Takeaways from USDA's February Report
While USDA’s annual Agricultural Outlook Forum is on tap later this month (Feb. 23-24), the February round of Crop Production and World Agricultural Supply and Demand Estimates (WASDE) rarely has a big impact.
Though Tyler Schau, AgMarket.Net hedging strategist, wouldn’t call this month’s report a barnburner, it did have a few market implications.
1. This month’s 2022/23 U.S. soybean outlook is for lower soybean crush and higher ending stocks. Soybean crush is forecast at 2.23 billion bushels, down 15 million from last month on lower domestic soybean meal disappearance and a higher soybean meal extraction rate.
“So, the change in domestic crush was really the only big change on the soybean side,” Schau says.
With soybean exports unchanged, ending stocks are forecast at 225 million bushels, up 15 million. The U.S. season-average soybean price for 2022/23 is forecast at $14.30 per bushel, up 10¢ from last month.
"The world soybean market kind of took another little hit & had a little bit of a pull back on production. That's going to keep everyone guessing [on] how does the weather in South America play out..."
A Post-Report Analysis with Tyler Schauhttps://t.co/ytDaHG2b4a pic.twitter.com/x3M24BjXcT — AgMarket (@AgMarket_Net) February 8, 2023
2. On the global soybean front, Argentina’s crop was reduced by 4.5 million tons to 41 million on lower area and dry weather conditions impacting yields.
“The story has been talked about for months that there was too much rain in Brazil and not enough rain in Argentina,” Schau says. “The reduction in Argentina was finally realized in the USDA numbers.”
Ahead of the WASDE report, analysts were expecting Argentina’s soybean crop to come in at 42.34 million tons. In January, USDA pegged the crop at 45.5 million tons.
Brazil’s soybean crop was left unchanged at 153 million tons.
“The world soybean market kind of took another little hit and had a bit of a pullback on production,” Schau says. “That's going to keep everyone guessing how the weather in South America plays out, and then the next wildcard is what happens up here in the spring.”
3. Corn used for ethanol was reduced by 25 million bushels. That’s a 1.4% drop year-over-year.
With no other use changes, U.S. corn ending stocks are up 25 million bushels from last month. The season-average corn price received by producers is unchanged at $6.70 per bushel.
Global corn ending stocks, at 295.3 million tons, are down 1.1 million.
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