Porto Alegre, July 3, 2023 – The expected report on planted area in the United States, released by the United States Department of Agriculture (USDA) on June 30, focused the market’s attention last week and surprised everyone, changing the price trend in Chicago for the next few weeks.
USDA brought a very expressive and totally unexpected cut in the size of the US acreage that was sown with soybeans in the 2023/24 season. The market expected a small increase in area, mainly due to the strong pace during the planting period.
According to USDA, the area planted with soybeans in the United States in 2023 must total 83.5 mln acres, down 5% from the previous year and the initial estimate for this season, published in its March planting intention report. The cut corresponds to the non-sowing of 4 mln acres, which constitutes a very important reduction.
The number was well below the market expectation of 87.7 mln acres. In the planting intention report, released in March, the forecast was 87.5 mln acres. Last year, US growers planted 87.45 mln acres. According to USDA, 21 out of the 29 growing states must reduce or maintain planting.
This new number from USDA completely changes the scenario for futures contracts in Chicago because now the United States no longer has the potential to reap a record crop. In addition, the US productive potential was reduced by at least 5 mln tons, not counting the possible decline in average yield due to the erratic climate. In view of this, USDA must bring a large reduction in the US production in its July supply and demand report, which will be released on the 12th. The trend is for a crop below 118 mln tons, which, besides being ahead of the previous season, would not recover final stocks. Such a scenario must quite strengthen Chicago, which was still feeling the pressure of a possible record crop. We understand that now the market must gain momentum in the coming few weeks, entering an upward trend in the short term, at least until the confirmation of the production size, which will certainly no longer be a record and probably be lower than the previous season’s (if the weather does not greatly improve).
Follow the Safras Agency on our website. Also follow us on our Instagram and Twitter and stay on top of the main agribusiness news!
Copyright 2023 – Grupo CMA