The expected September supply and demand report from the United States Department of Agriculture (USDA), released on the 12th, surprised and shook the soybean market last week. While the market was already expecting cuts in US production and stock estimates for the 2022/23 season, the size of the adjustments was very surprising. While the market expected a cut of between 1 and 1.5 mln tons in production, USDA brought a cut of more than 4 mln. With the feeling of lower supply, futures prices took off on Monday on the Chicago Board of Trade (CBOT), guaranteeing the weekly appreciation.
The report indicated that the US soybean crop is expected to reach 4.378 bln bushels in 2022/23, equivalent to 119.15 mln tons. Yield was indicated at 50.5 bushels per acre. In August, the indications were 4.531 bln bushels – 123.3 mln tons – and 51.9 bushels, respectively. The market was betting on 4.481 bln bushels or 122 mln tons. The reaped area had its forecast revised from 87.2 to 86.6 mln acres.
Ending stocks are projected at 200 mln bushels or 5.44 mln tons. In August, the figure was 245 mln bushels or 6.67 mln tons. The market was betting on a carryover of 240 mln or 6.53 mln tons. USDA indicated crush at 2.225 bln bushels and exports at 2.085 bln. Last month, the forecast was 2.245 bln and 2.155 bln, respectively.
What these new numbers show us is that USDA may have made some mistakes in some reports this year and is perhaps trying to correct them now. For example, it does not make sense for USDA to raise the production estimate in its August report when practically the entire month of July was characterized by the worsening of crops due to low moisture and high temperatures in part of the growing belt. And, after that increase in August, such a significant cut is estimated in September, just a few days away from the start of the harvest. Besides, the current production figure contrasts sharply with the Pro Farmer figure, released at the end of August, which points to a crop of 123.4 mln tons, despite some reported problems.
Anyway, the USDA numbers are benchmarks for Chicago. In this regard, Chicago gains strength in the face of a crop with production problems that will prevent a record production, culminating in tighter stocks than the previous season.
Now, we need to follow the harvest, which is about to start in the growing belt. The slightly moist climate must be favorable. Only crop evolution will reveal the true size of the US output. New surprises cannot be ruled out.
For the 2021/22 season, the Department put production at 4.435 bln bushels, or 120.7 mln tons. Stocks were indicated at 240 mln bushels or 6.53 mln tons. The market was betting on 233 mln or 6.34 mln.
Regarding the global picture, USDA projected the world soybean crop in 2022/23 with 389.77 mln tons. In August, the projection was 392.79 mln tons. Ending stocks are estimated at 98.92 mln tons, against 101.41 mln tons in August. The market expected ending stocks of 101.1 mln tons.
USDA projects the US crop with 119.2 mln tons, against 123.3 mln in August, as already mentioned. The Brazilian crop was indicated at 149 mln, and the Argentine crop at 51 mln tons, without changes. China is expected to import 97 mln tons, down one mln from the August projection.
For the 2021/22 season, global production is estimated at 353.24 mln tons, with ending stocks of 89.7 mln. The market had projected carryover stocks of 89.9 mln tons.
The estimate for the Brazilian crop was maintained at 126 mln, and the forecast for Argentina remained at 44 mln. The figure for Chinese imports stood at 90 mln tons, unchanged from August.