Argentinian maize and soyabean production cut further in latest WASDE: Grain market daily
Argentinian maize and soyabean production cut further in latest WASDE
The USDA released their latest World Agricultural Supply and Demand Estimates (WASDE). With much of the market focus now on new crop conditions for next season’s production, the report didn’t result in any major market reactions. However, South American production remains a watchpoint, and as expected by many, further revisions were made to Argentinian maize and soyabean crops. So how did the revisions compare to analyst’s expectations? And what does that mean for the global supply and demand balance?
Market commentary
- UK feed wheat futures (May-23) closed at £195.10/t yesterday, down £0.15/t from last Thursday’s close. New crop futures (Nov-23) lost £1.25/t over the same period, ending the session at £211.10/t.
- According to Refinitiv, beneficial rainfall across Europe over the last couple of weeks has benefited the European wheat outlook, though parts of south-western Europe particularly still need more rain to reduce potential dryness stress.
- Reportedly no ships were inspected yesterday under the Ukraine Black Sea grain deal according to Refinitiv, as “parties needed time to reach an agreement on operational priorities” as stated by the UN. Routine inspections are due to resume today.
- Paris rapeseed futures (May-23) closed at €460.50/t yesterday, down €1.00/t from Thursday’s close. New crop futures (Nov-23) were also down €1.00/t over the session, closing at €464.25/t.
- Forecasts of a good European rapeseed harvest continues to pressure prices. France’s Farm Ministry pegged its rapeseed area for harvest 2023 at 1.34Mha this morning, up 9.3% on the year.
Maize
Ahead of yesterday’s report, in a Refinitiv poll, the average of analysts’ estimates for Argentinian maize production sat at 37.1Mt. Analyst expectations were fairly accurate, with production pegged at 37.0Mt, down 3.0Mt from last month’s estimate. If realised, production would be the lowest since 2017/18, as the extreme drought and continued heat throughout March pressures yield prospects for late-planted maize. While this is now the fourth month in a row that the USDA has cut Argentinian maize production, it’s worth noting that the estimate remains above the Buenos Aires Grain Exchange estimate of 36.0Mt. Brazil’s maize crop also remains pegged at 125Mt, a record high.
As global production was trimmed, Argentina’s exports were also revised to 25.0Mt, down 3Mt from the previous months report. In terms of what this means for global supply and demand, analysts had predicted world maize ending stocks to be at 295.0Mt. The USDA pegged stocks at 295.4Mt, slightly higher than expected, but down 1.1Mt on last month’s estimate. Yesterday’s report did not lead to much price action on the US maize market, suggesting much of this news had already been priced in. Chicago maize futures (May-23) closed at $256.30/t, down $1.18/t from Monday’s close. New crop futures (Dec-23) lost $1.37/t over the same period, ending the session at $220.18/t.
Despite large cuts to Argentinian production, and tight US stocks as at the end of March, much of this is priced in. It’s likely that demand will be a key driver of price direction. We know supply is going to increase going forward too, with a large Brazilian crop on the market, plus a large US crop due in September.
