Articles
10 February 2022

WASDE update: Soybeans rally on tighter balance

The USDA has once again revised down its global soybean ending stock estimates, with poor weather hurting supply prospects for South America. The report was mildly supportive for corn and wheat, with the global balances tightening for both

Soybeans market tightens up

The USDA has once again revised down global production and inventory estimates for soybeans as adverse weather continues to hurt South American crop prospects. The agency revised down global soybean production by 8.7mt, with major downgrades coming from Brazil (-5mt), Argentina (-1.5mt) and Paraguay (-1.8mt). This is after the USDA had already lowered its global production estimate by around 9.2mt last month. Taking into account the latest downgrade, the agency has cumulatively lowered global soybean production estimates by around 21.3mt over the past 4 months. When considering this, the strength that we have seen in prices over the last couple of months is no surprise. In fact, yesterday’s WASDE was enough to push CBOT soybean above US$16/bu for the first time since June last year. The USDA now expects global soybean production to total around 363.9mt in 2021/22, down from 366.2mt in 2020/21. Global soybean demand estimates were also revised down by around 5.8mt to 369.2mt, due to softer demand from China (-3mt), as higher prices weigh on consumption. As a result of the latest changes, the USDA lowered its ending stocks estimate for 2021/22 by 2.4mt to 92.8mt. The market was expecting a more aggressive revision, with expectations of ending stocks around 91mt.

For the US market, the USDA also revised down soybean inventory estimates by 25m bushels to 325m bushels, due to stronger demand. Healthy demand for soybean oil was seen pushing up soybean crushing in the domestic market, with domestic consumption estimates revised up from 2.31b bushels to 2.33b bushels. Domestic production and export estimates were left unchanged at around 4.44b bushels and 2.05b bushels respectively.

Soybeans supply/demand balance

Source: USDA
USDA

Corn balance left largely unchanged

The USDA left its US corn balance sheet unchanged this month, with production and ending stock estimates left at 15.12b bushels and 1.54b bushels respectively. The market was expecting ending stocks to be revised down to somewhere in the region of 1.51b bushels.

Globally, the agency revised down production estimates by around 1.6mt, mostly on the back of weaker supply prospects from Brazil where production was revised down by around 1mt. Global demand for corn was revised down by around 0.9mt. As a result, global corn ending stocks for 2021/22 were revised down by around 0.8mt to 302.2mt. The market was looking for a number closer to 300mt. While the revisions were less than what the market was expecting, the global market is still looking marginally tighter than it was last month.

Corn supply/demand balance

Source: USDA
USDA

Marginal changes for wheat

The USDA revised higher US wheat ending stocks for 2021/22, by 20m bushels to 648m bushels, due to weaker consumption and exports. Export estimates were lowered by around 15m bushels to 810m bushels, on slower export sales and shipments.

The USDA tightened its global wheat balance marginally. Ending stocks for 2021/22 were lowered by 1.7mt to 278.2mt. This revision lower comes despite an increase in beginning stocks by around 1.1mt. Global wheat production estimates fell by 2.2mt to 776.4mt, with major downgrades seen from the Middle East due to dry weather. Global demand for wheat increased by 0.6mt to 788.1mt, on higher feed and residual demand mainly from Canada.

Wheat supply/demand balance

Source: USDA
USDA
Content Disclaimer
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more