USDA experts lowered Argentina’s soybean crop forecast more than analysts expected

Drought in Argentina worsens outlook for soybean harvest, but global balance remains stable. USDA experts in an April report lowered the forecast for global production and consumption of soybeans, so the estimate of ending stocks was almost unchanged, although analysts expected them to be significantly reduced.

Compared to the March estimates , the April soybean balance for the 2022/23 MY underwent the following changes:

• The estimate of initial reserves was increased by 0.73 mln t to 99.73 mln t (100.35 mln t in MY 2021/22) as a result of lower processing and consumption volumes in FY 2021/22.
• The global production forecast was reduced by 5.51 to 369.64 (358.14) million tons, primarily for Argentina due to a prolonged drought – by 6 to 27 million tons (43.9 million tons in 2021/22 MR and 46.2 million tons in 2020/21 MY), although analysts estimated the harvest at 29.3 million tons, the Rosario Exchange (RGE) at 27 million tons and the Buenos Aires Exchange (BAGE) at 25 million tons. For Uruguay, the forecast was lowered by 0.9 to 1.2 million tons as a result of a decrease in sowing areas and productivity. For Brazil, the forecast was raised by 1 to 154 (130.5) million tonnes due to increased acreage and yields, while analysts estimated production at 153.67 million tonnes, and local agency Safras & Mercado raised its estimate to 155 from 152.4. 1 million tons
• The estimate of world consumption was reduced by 5.3 to 365.83 (363) million tons, in particular for Argentina – by 3.25 to 37.7 (46) million tons, China – by 1 to 112.3 (107.6) million tons due to a decrease in processing volumes.
• The global export forecast was reduced by 0.4 to 168 (167.4; 153.9) million tons, primarily for Uruguay. For Argentina, the export estimate was left unchanged, despite a significant reduction in the harvest, while the import forecast was raised by 1 to 8.3 million tons.
• The estimate of global ending stocks was increased by 0.28 to 100.29 (99.7; 100.3) million tons, while analysts estimated them at 98.56 million tons. The increase in stocks in China and Brazil will be partially offset by their reduction in Argentina.

May soybean futures on the Chicago Stock Exchange rose 0.7% to $550.1/t on the report, nearly matching last month’s level, while November new-crop soybean futures traded 14% cheaper – at $483/t.

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. Export estimates were increased for Australia by 0.6 to 6.3 million tons, Ukraine – by 0.3 to 3.4 million tons, and import estimates for the EU and Pakistan were also increased.

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