Soybean: Without major adjustments, USDA increases US stocks and ignores changes in Brazil's harvest
“In waiting mode for the May report – the classic update to include the new harvest – the USDA has now brought in April only marginal adjustments to the soybean supply and demand picture in the US and simply ignored the Brazilian production scenario”, he says. Alef Dias, Grains and Macroeconomics analyst at Hedgepoint Global Markets.
“In the USA, the department confirmed lower demand, adjusting the export and use lines for seeds downwards”, he points out.
The pace of shipped export sales is close to the lows of the last 5 years. Regarding the use of seed, the cut is in line with the fact that the area reported in the planting intention report came below the Agricultural Forum area.
“In relation to Brazil, the difference between the USDA reading for soybean production and that of Conab is the largest in history, 155M mt against 146,5M mt, respectively”, he highlights.
Corn: Domestic consumption at full steam in the USA
“In line with market expectations, the USDA has adjusted upwards two important lines of corn consumption in the US: animal feed and use for ethanol. In this way, the North American ending stock was reduced, reaching market expectations given the numbers from the last quarterly stock report”, says Alef.
“For South America, the USDA brought a lower reading for the Argentine harvest, from 56 to 55M mt, reflecting a cut in production potential. In Brazil, the department's decision was to keep its reading unchanged despite the recent cuts made by Conab. Just like in soybeans, the readings of the two entities for corn differ month by month, with USDA estimating 124M mt while Conab works with 111M mt”, he observes.
It is worth noting that China's corn import projection remains maintained at 23M tonnes, despite recent signs of a weakening of the Asian giant's appetite.
Wheat: Low numbers in the US steal market attention
The bearish US ending stock numbers weighed on prices amid the bullish global numbers. On balance in the US, domestic consumption was reduced due to lower-than-expected implied feed use and residues in the second and third quarters, based on the latest NASS Grain Stocks report. Consequently, ending stocks were increased by 25M bu, more than the median estimate.
“However, the global numbers brought some high points to be considered. Although the market was expecting higher global ending stocks, the USDA presented a cut of 0,5M mt, due to the increase in exports from Ukraine and domestic consumption in India”, he points out.
Food, seed and industrial use in India increased by 2M mt this month to 106,2M mt. The latest monthly stock reports issued by the Food Corporation of India show continued open market sales as the Indian government tries to limit food price inflation ahead of elections starting later this month.
Ukraine's exports increased by 1,5M mt to reach 17,5M mt, as competitive prices and the extension of opening hours at Odessa ports this year allowed an increase in export activity.
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