WASDE update: Further tightening for wheat and soybeans

The US Department of Agriculture has revised higher corn ending stocks for 2021/22 to 305.5mt, up from a previous estimate of 301mt. The market was expecting a number closer to around 300mt. The major revision was on the supply side. The agency now estimates global output to be at around 1,210.5mt compared to an earlier estimate of 1,206.1mt, on the back of better supply prospects from Brazil (+2mt), the European Union (+0.7mt) and South East Asia (+0.7mt). Meanwhile, global corn demand estimates were increased by around 0.5mt to 1,197.2mt for the year, with demand gains in other countries being offset by a reduction of around 3mt from China.

The USDA revised down global corn export estimates by around 2.9mt as shipments from Ukraine were seen falling to 23mt compared to a previous estimate of 27.5mt. The revision lower in Ukrainian exports leads to an increase in Ukrainian ending stocks. However, obviously, these stocks are not accessible given the ongoing war.

The USDA left its US corn balance sheet unchanged, with ending stocks remaining at 1.44b bushels.

While higher than expected global ending stocks should be bearish for the corn market, the risk around Ukrainian supply continues to offer support.

The USDA lowered its soybean production outlook once again, revising down global output by 3.1mt to 350.7mt. Brazil’s soybean supply was lowered by around 2mt to 125mt, whilst Paraguay production estimates were reduced by 0.9mt to 4.2mt. Global soybean demand estimates were lowered by around 1.8mt to 361.9mt- mostly due to weaker demand from China. The agency expects 2021/22 global stocks to fall from 103.1mt at the beginning of the season to around 89.6mt by the end of this season, compared to 90mt previously. The market was expecting an ending stock number of around 88.5mt.

The USDA revised higher export estimates for the US by a marginal 25m bushels to 2.12b bushels, with lower supply from South America creating additional demand for US beans. As a result, the agency revised down ending stock estimates by around 25m bushels to 260m bushels for 2021/22.

The USDA increased global wheat demand estimates by around 3.8mt to 791.1mt, with major gains coming from India, where the USDA now estimates domestic demand to increase to 107.9mt compared to a previous estimate of 103.5mt.

As a result, global wheat ending stocks for 2021/22 were lowered by around 3.1mt to 278.4mt. The market was looking for a relatively higher number of around 281m.t

The USDA lowered global wheat export estimates by around 3mt, which was driven by a reduction in the EU, with export expectations cut from 37.5mt to 34mt amid the ongoing Russia-Ukraine war. Wheat shipments from the EU have slowed down to a trickle in recent weeks as countries aim to bolster domestic stocks given the supply uncertainties.

The USDA left production estimates unchanged at 1.65b bushels for the US market, whilst domestic consumption estimates were reduced by around 10m bushels to 1.12b bushels. The agency also revised down wheat export estimates by around 15m bushels to 785m bushels leading to an upside revision in domestic inventory estimates by 25m bushels to 678m bushels.