Porto Alegre, October 16, 2023 – The October supply and demand report from the United States Department of Agriculture (USDA), released last Thursday (12), brought some surprises, but the adjustments in the numbers do not bring a major change in the scenario for the coming few months.
The market expected a small cut in US production and an increase in stocks for the 2023/24 crop due to larger carryover stocks coming from the 2022/23 crop. USDA confirmed the production cut bias, but its size was larger than the market expected. Regarding stocks, USDA maintained the number, not confirming the bias expected by the market. These facts brought a relatively bullish tone to the report, with the market reacting positively after the release of the numbers. In any case, we understand that the impacts must be isolated, as the market’s attention is already turning to the new South American crop, which tends to be much higher than the 2022/23 season, mainly due to the recovery trend of the Argentine crop. Thus, we do not see the market changing its negative trend in the near future just because of the new USDA numbers for the US picture. The weather in South America will be the determinant from now until the South American harvest.
USDA indicated that the US soybean crop is expected to hit 4.104 bln bushels in 2023/24, equivalent to 111.7 mln tons. Yield was reduced to 49.6 bushels per acre. The number was below the market forecast, which was 4.132 bln bushels, or 112.45 mln tons. In the previous report, the forecast was 4.146 bln or 112.83 mln tons.
Ending stocks are projected at 220 mln bushels or 5.99 mln tons. The market was betting on a carryover of 236 mln or 6.42 mln tons. There was no change in comparison to September. USDA raised the estimate for the US crush from 2.29 bln (62.32 mln tons) to 2.3 bln bushels (62.59 mln tons). For exports, there was a cut from 1.79 bln (48.716 mln tons) to 1.755 bln bushels (47.763 mln tons).
Regarding the global picture, USDA projected a global soybean crop in 2023/24 of 399.5 mln tons. In September, the forecast was 401.33 mln. Ending stocks were reduced from 119.25 mln to 115.62 mln tons. The market was expecting 119.6 mln tons.
USDA projects the US crop at 111.7 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. There were no changes to the estimates. China is expected to import 100 mln tons, also unchanged.
Global stocks in 2022/23 are estimated at 101.89 mln tons, while the market was betting on 103.3 mln tons.
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