
- The spotlight this month was on South American soybean production, with the only change being a 4.5 mmt cut in USDA's Argentine production guess.
- Similarly, USDA trimmed its guess on Argentina's corn production by 5.0 mmt from last month.
- In wheat, the only significant change was a 2.0 mmt increase in Australian production.
Feel free to have the Eagles soulful “Wasted Time” playing as background music as we talk about USDA’s February WASDE released Wednesday. As I’ve said before, Groundhog Day is to real meteorologists as a government report day is to real market analysts. A couple things to keep in mind with any report: First, all the numbers are made up and second, well, nothing else matters when we accept the first things as fact. For this piece, I’ll take the markets one by one, from presumably the most important to the least, at least for today.

Before we get rolling, I’ll remind you I post real supply and demand calculations at the end of each month. My available stocks-to-use (as/u) figures are not tied to USDA’s numbers in any way, shape, or form but instead the result of my analysis of national average cash price. After all, the cash price is the intrinsic value of a market and Economics 101 taught us that market price equals the intersection of supply and demand curves. It’s amazing how many so-called “economists” have forgotten that. Anyway, a look at the attached table shows you the US available stocks-to-use situation at the end of January 2023 as compared to December 2022 and January. Keep in mind the smaller as/u the tighter supply and demand is, meaning fundamentals are more bullish.
What did USDA have to say about soybeans? Nothing really. The US supply and demand table saw few changes, with only a 15 mb decrease in crush demand for the month. Does this make any sense? Not at all, but it’s a USDA report, so it doesn’t have to make sense. The only rationale I can see is if USDA is actually a tighter US soybean supply situation than what it is reporting. Using its estimates we come up with ending stocks-to-use of 6.7% as compared to my end of January as/u of 3.8%. Futures spreads showing strong inverses suggest I’m closer to correct. While I could also make the argument US export demand should’ve been increased, I understand the official hesitancy to do so given Brazil’s projected record large crop.

Speaking of which, USDA left Brazil’s production at 153.0 mmt while lowering Argentina’s from last month’s 45.5 mmt to 41.0 mmt. For now, I’ll stick with Barchart’s initial production estimates of 150.4 mmt (Brazil) and 43.0 mmt (Argentina) released Tuesday afternoon. The bottom line is the market will continue to tell us how bullish or bearish things are, though we will never know the actual numbers.
The only change on the US corn ledger was a bit of a surprise as USDA decreased its guess on ethanol demand by 25 mb. My thought going into this monthly silliness was ethanol would be left alone for now, while both feed and exports were vulnerable to decreases. Regarding exports, the latest weekly sales and shipments update showed the US on pace to ship 1.657 bb during 2022-2023 as compared to 2021-2022’s reported 2.353 bb. Granted, USDA dropped its guess by 150 mb in its January round of reports though the 1.925 bb still seems high, particularly with only 513 mb of unshipped sales on the books in late January. In retrospect, USDA also dropped its feed demand by 25 mb in January so maybe there wasn’t any reason for further eraser marks this time around.
On the global stage the big news was USDA trimmed its Argentine production guess by 5.0 mmt down to 47.0 mmt. Otherwise, there were few changes on the production front with Brazil left alone at 125.0 mmt. In its initial estimates Barchart had Brazilian corn at 128.6 mmt with Argentina’s crop at 47.7 mmt. On the import side, the only change of note was the EU estimate increased by 2.0 mmt.

And if you thought soybeans and corn were dull, there was less happening in wheat. The US supply and demand table was left unchanged, normal for this time of year. As for the global situation, ending stocks were increased by roughly 1.0 mmt due to an increase in Australian production of 2.0 mmt and a slight increase in demand from the EU. Why then did wheat futures post a solid rally? It’s Wednesday, the first day of the new positioning week for noncommercial traders and this group continues to hold a net-short futures position in all three markets (presumably).
More Grain News from Barchart
- Midday Wheat Prices Trading Higher
- Mixed Soy Board at Midday
- Corn Gaining after Report
- Arabica Coffee Declines on Brazil Real Weakness and Larger ICE Inventories
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.