USDA Reports Preview

USDA's World Agricultural Supply and Demand Estimates (WASDE) report in February is usually a quiet affair for grain and oilseed prices. This year, there may be some adjustments to U.S. export estimates. But most of traders' attention will likely be on South American crop estimates for corn and soybeans.

USDA will release its February Crop Production and WASDE reports at 11 a.m. CST on Thursday, Feb. 8.

CORN

Just one year ago, the February WASDE report described a much different corn market. USDA estimated U.S. ending corn stocks at 1.267 billion bushels (bb), and March corn was trading near $6.78 a bushel. As of Monday, Feb. 5, USDA is estimating 2.162 bb of U.S. ending stocks, and March corn closed at $4.42 3/4, buried not only by increased U.S. supplies, but also by the anticipation of more corn on the way from Brazil and Argentina. If Dow Jones' survey of analysts is correct, USDA will lightly reduce its estimate of U.S. ending corn stocks to 2.134 bb.

Typically, the February WASDE report doesn't bring much change to U.S. estimates, but in Thursday's report, there is a chance for a small increase in USDA's estimate of corn exports. Among USDA's world corn estimates, traders will quickly look for any changes to the production estimates for Brazil and Argentina, as well as the corn export estimate for Ukraine. Dow Jones' survey expects USDA to reduce its estimate of Brazil's corn production from 127.0 million metric tons (mmt) to 124.3 mmt, or 4.89 bb. USDA's estimate for Argentina is expected to increase slightly, from 55.0 mmt to 55.7 mmt, or 2.19 bb. For world ending corn stocks, Dow Jones expects a small decrease, from 325.22 mmt to 324.0 mmt, or 12.76 bb, the highest in six years. Excluding China, world ending corn stocks were estimated at 113.36 mmt, or 4.46 bb, in January.

SOYBEANS

For soybean prices, the arrival of 2024 has brought a bearish slap in the face, quickly taking over a dollar a bushel off the price of March soybeans as of Feb. 5. The reasons behind the selling are likely a combination of big or big-enough crops from Brazil and Argentina and a concern about slower demand in China. There is also a chance USDA will reduce its 1.755-bb export estimate by 25 million bushels (mb) or 50 mb, as 2023-24 exports to date are down 23% from a year ago. Dow Jones' survey expects USDA to only increase its estimate of U.S. ending soybean stocks from 280 mb to 282 mb, but ending stocks are at risk of being increased more than the survey suggests.

For world soybean stocks, Dow Jones expects USDA to reduce its estimate from 114.60 mmt to 112.90 mmt, or 4.15 bb. Dow Jones' analysts expect Brazil's soybean production estimate be lowered from 157.0 mmt to 153.0 mmt, or 5.62 bb. The same estimate for Argentina is expecting a slight increase, from 50.0 mmt to 50.8 mmt, or 1.87 bb.

Whatever USDA estimates Thursday, it is possible traders won't show much response, having already responded to a sharp drop in Brazil's local prices in January. On Monday afternoon, the price of March FOB soybeans was quoted at $11.08 in Paranagua, Brazil, much lower than the comparable price of $12.44 in New Orleans.

WHEAT

One month ago, USDA estimated 648 mb of U.S. ending wheat stocks for 2023-24, the second-lowest total in 10 years. As DTN has often explained in daily market comments, the main problem for U.S. wheat prices has been a chronic lack of export demand. Total wheat export sales are on pace for USDA's 725-mb estimate in 2023-24, but shipments have lagged and are down 10% from a year ago. Even if USDA's estimate is achieved, it will be the lowest export total in over 50 years.

Not much change is expected for wheat estimates in February, and keep in mind that Thursday's report won't have any estimates for the 2024-25 wheat season. Dow Jones' survey expects USDA to slightly increase its estimate of U.S. ending wheat stocks from 648 mb to 649 mb.

For world ending wheat stocks, USDA is expected to slightly tweak its estimate from 260.03 mmt to 260.10 mmt, or 9.56 bb. There probably won't be many changes, but two possibilities to watch for are increases in USDA's 25.5-mmt wheat production estimate for Australia and in USDA's 14.0-mmt wheat export estimate for Ukraine. Some are saying Australia's crop could be closer to 30.0 mmt, and USDA's attache reported Ukraine's exports through the Black Sea are doing better than expected.

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Join us for DTN's webinar at 12:30 p.m. CST Thursday, Feb. 8, as we point out USDA's new numbers and add our own market comments. Questions are welcome and registrants will receive a replay link for viewing at their convenience. Register here for Thursday's February WASDE report webinar: https://www.dtn.com/….

Todd Hultman can be reached at todd.hultman@dtn.com

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