Grain Comments: 03-09-2023

Good Morning

The USDA has been steadily cutting Argentine production estimates in recent months and they got even more aggressive yesterday, but that was immediately followed by even more pessimistic estimates from the Rosario Exchange as corn and soy output there falls to historically low levels.

U.S. forecasts remain cool and wet for the next two weeks, with the SW Plains still on the shortest precipitation end, at least until the 11-15 day time frame.

Argentine rains will increase west and south over the next 7-10 days, though it is likely too late for most; Brazil again saw rains north yesterday with rains lingering center-north going forward, and drier conditions holding south.

Trade reaction to the March WASDE report was less favorable than hoped for. This was especially the case on soybeans where the USDA trimmed domestic ending stocks to just 210 million bushels (mbu), the lowest level in the past seven years. This is a stocks to use of just 4.8% and leaves the complex in a rationing position. More importantly this leaves the US with no room for production losses this year. The soy market failed to react to this lower carryout though as high Brazilian production is still expected. World soybean reserves are forecast to tighten 2 million metric tons (mmt) this year to a tight but manageable 100 mmt. The biggest surprise on soybean balance sheets was a reduction to the Argentine crop of 8 mmt to just 33 mmt. Corn carryout increase to 1.342 billion bu which was at the top of trade guesses. The USDA trimmed corn exports by 75 mbu and further reductions are possible. The stocks to use on corn was bumped up to 9.7% and removed most of the need for price rationing. The USDA also lowered the Argentine corn crop, reducing it by 7 mmt to 40 mmt. The question moving forward is if more reductions to the Argentine crops are needed given the stage of year we are at.

Have a great day!