USDA confirms soybean cuts, but Chicago reacts negatively

The September supply and demand report by the United States Department of Agriculture (USDA), which was released Tuesday (12), focused the market’s attention in recent days, bringing movements to Chicago. USDA confirmed the bias expected by the market, bringing cuts in productivity, production and US stocks for the 2023/24 season. Despite this, the cuts were a little smaller than the market expected, and Chicago, instead of responding positively to a “bullish” report, responded negatively, which came as a surprise.

We remember that although the USDA numbers were slightly above expectations, the differences were very small. We are talking about the lowest carryover stocks since the 2015/16 season, besides the lowest production since the 2019/20 crop. We understand that the market can still digest the numbers better, seeking some support. But the big point is that the market is demonstrating that most of the figures for the US crop are already priced in and that from now on they would have little influence on Chicago, which is already beginning to focus on the new South American crop. As the South American crop is expected to be large, with emphasis on the recovery of production in Argentina, the trend at the moment is for weaker prices in the coming few months, which weighs on Chicago.

USDA indicated that the US soybean crop is expected to hit 4.146 bln bushels in 2023/24, equivalent to 112.84 mln tons. Yield was indicated at 50.1 bushels per acre. The number was above the market forecast, which was 4.139 bln bushels (112.64 mln tons). In the previous report, the forecast was 4.205 bln or 114.45 mln tons.

Ending stocks are projected at 220 mln bushels or 5.99 mln tons. The market was betting on carryover stocks of 213 mln or 7.1 mln tons. In August, the number was 245 mln or 6.67 mln tons. USDA predicted the crush at 2.290 bln bushels (62.32 mln tons). Exports were cut from 1.825 bln bushels (49.67 mln tons) to 1.790 bln (48.72 mln tons).

For the 2022/23 season, USDA maintained its production estimate at 4.276 bln bushels, or 116.38 mln tons. Ending stocks were estimated at 250 mln bushels – 6.81 mln tons.

Regarding the global picture, USDA projected a global soybean crop in 2023/24 of 401.33 mln tons. In August, the forecast was 402.79 mln. Ending stocks have been reduced from 119.40 to 119.25 mln tons. The market was expecting 118.5 mln tons.

USDA projects the US crop at 112.84 mln tons, as already mentioned. The Brazilian crop was projected at 163 mln tons. For Argentina, the forecast is for the production of 48 mln tons. China is expected to import 100 mln tons.

For the 2022/23 season, USDA estimated a global output of 370.11 mln tons. For the United States, the estimate is 116.38 mln tons. Brazil’s crop was projected at 156 mln and Argentina’s at 25 mln tons. Global stocks are estimated at 102.99 mln tons.

Tags: Market, Argentina, China, USDA, Brazil, soybean, US, Production, crop, stocks, output