USDA Cuts Argentina Soybean Crop Forecast, Raises Canola Production Forecast, But Both Crops Fall

Prolonged drought in Argentina dampens outlook for soybean crop, but global soybean balance remains stable as USDA lowers consumption forecast, and in overall oil balance, decline in soybean crop offsets increase in canola crop.

Despite the downgrade for Argentina, the global balance sheet is still more stable than last year, thanks to an increase in Brazil’s harvest and lower global demand.

Compared to the February estimates, the new balance for soybeans for 2022/23 MY underwent the following changes:

• The estimate of initial reserves has been increased by 0.17 mln t to 99 mln t (99.75 mln t in MY 2021/22) due to reduced processing and consumption in FY 2021/22.
• The global production forecast was reduced by 7.86 to 375.15 million tons, which would be 17 million tons higher than the 358 million tons collected in FY 2021/22. Due to a long drought, the harvest forecast for Argentina was reduced by 8 to 33 million tons (43.9 million tons in 2021/22 MY and 46.2 million tons in 2020/21 MY), although analysts estimated it at 42.3 million tons, and the USDA was expected to lower the forecast to only 36.65 million tons. We will remind that the Rosario Exchange (RGE) lowered its forecast from 33 to 27 million tons. For Brazil and Paraguay, the forecasts were left at the level of January and February, which is in line with market and local estimates agencies.
• The estimate of global soybean consumption was reduced by 5.28 to 371.17 (362.27) million tons, in particular for China – by 2 to 113.3 million tons.
• The global export forecast was increased to 168.4 (167.4; 153.9) million tons, in particular for Brazil – to 92.7 (92; 79) million tons, the USA – to 54.8 (54.1; 58) .7) million tons, Paraguay – up to 6.4 (6.3; 2.2) million tons, while for Argentina it was reduced to 3.4 (4.2; 2.8) million tons.
• The estimate of final reserves was reduced to 100 (102; 99) million tons, in particular for Brazil – to 31.5 (32.2; 26.8) million tons, Argentina – to 19.8 (22.4; 23.9) million t, the USA – up to 5.7 (6.1; 7.5) million tons, while for China the estimate was increased to 34.3 (32.3; 31.4) million tons.

According to the report, May soybean futures in Chicago fell 0.4% to $554/t, which is almost the same as last month.

USDA experts increased the forecast of world production of canola by 1.2 to 86.3 million tons, in particular for Australia – by 1 to 8.3 million tons due to the increase in sowing areas and productivity. Rape export estimates were raised for Australia by 0.6 to 6.3 million tons and Ukraine by 0.3 to 3.4 million tons, in line with increased import estimates for the EU and Pakistan.

Rape futures on the exchange in Paris in two days fell by 2.96% to 499 €/t (-10% for the month) against the background of increased offers from Australia.

Tags: Argentina, prices, soybean, USDA Report, rapeseed