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Market Analysis

The USDA returned to its conservative approach in its February S. American crop production estimates. Their modest 1 & 3 mmt lower Brazilian soybean and corn crop estimates were unexpected after Brazil’s ag department updates. Conab dropped their 2024 estimates below 150 & 118 mmt ahead of the USDA’s Thursday updates. Given Brazil’s erratic crop year with excessive rains in the south & heat & dryness plaguing the northern states, this month’s World Board revisions didn’t follow Parana & Goias reports of poor bean yields this week. Very small US corn & wheat balance sheet changes, but the USDA cut its US bean exports by 35 million because of recent sluggish sales.

The USDA’s surprising 156 mmt Brazilian bean update, down 1 mmt, after Brazil dropped its crop estimate by 5.9 to 149.4 mmt had many scratching their heads. Given the talk of 2.9 million hectares of Brazilian replanted beans because of tough growing season weather, the USDA’s larger area of 300,000 hectares also was a surprise. The trade was expecting a slight increase in Argentina’s bean crop.

However, recent heat & dryness prompted the USDA to keep it at 50 mmt this month. Despite S American output uncertainty, US export sales were cut by 35 million bu tafter sluggish exports the past 4-5 weeks pulled sales be- low beans’ seasonal pace. This change upped 2024’s US carryover forecast to 315 million bu, the highest in 4 years. The USDA did shave 3 mmt from Brazil’s corn crop to 124 mmt. However, this forecast remains above Conab’s 117.6 mmt estimate & many analysts’ ideas below 120 mmt because of Brazil’s erratic growing season. The USDA did cut Brazil’s area by 500,000 hectares to 21.9 million, but they left this year’s yield virtually unchanged resulting in 3 mmt smaller crop. Like soybeans, the World Board left Argentina’s corn crop unchanged at 55 mmt this month despite recent hot & dry weather. Corn’s world stocks were sliced by 3 mmt because of Brazil’s smaller crop, but the US carryover was upped by 10 million bu because of a dip in corn’s food industrial demand.

What’s Ahead:

Despite this month’s modest S Am crop declines, the markets appear to be concerned about Brazil’s bean output with yields remaining disappointing with harvest 25-30% done. Weather remains important with Brazil’s safrina corn & Argentina’s harvest still weeks away. Move sales to 65% & 50% in the lead month bean $12.40-50 prices & corn $4.60-70 price range. Advance KC wheat to 65% at $6.60.

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