The February World Agriculture Supply and Demand Estimates were focused solidly on South American product and losses tied to their ongoing drought in southern Brazil and Argentina.

As a result, USDA reduced global soybean production by 8.7 million metric tons (mmt) to 363.9. Brazil’s soybean crop is lowered 5 mmt to 134 million, Paraguay is lowered 2.2 million to 6.3 million, and Argentina is reduced 1.5 million to 45 million.  World carryout was also lowered by 2.4 mmt to 92.8 mmt with the lower South American production offset by a decrease in China soybean crush and imports, which USDA lowered 3 mmt to 94 and 97 million, respectively.

Bryan Doherty with Total Farm Marketing says the lower South American crop size was confirmed by USDA but was largely anticipated.  “Many of the private production numbers coming out of the Southern Hemisphere are even lower than USDA’s figure, so much of this has been priced into the soybean market.  However, at least the agency confirmed the trend.”  He anticipates soybeans could continue to move higher as exports have recently been tipping their hand with purchases in fear of the lower crop.  “I think we could move back up to the highs in soybeans set in 2021,” he adds.

This month’s 2021/22 U.S. soybean outlook worked in higher soybean crush, which resulted in lower ending stocks by 25 million bushels (mb) from last month to 325 mb. Soybean crush is forecast at 2.215 billion bushels, up 25 million from last month on favorable crush margins and improving prospects for soybean meal exports.

USDA made much smaller revisions on South American corn production with Brazil corn production down 1 mmt to 114 mmt.  They left Argentina unchanged at 54 mmt, so world corn carryout was lowered by only .9 mmt to 302.2 mmt.   U.S. corn ending stocks were unchanged from last month at 1.54 billion bushels (bb).

Doherty says USDA didn’t make the large revisions in the South American corn numbers.  “The second crop Brazilian corn is the largest percentage of production and is just being planted, so the jury is still out on that crop.”   However, he anticipates corn prices will continue to track with soybeans to keep acres and because all of the commodities are seeing investor buying as a hedge against inflation.

For U.S. wheat, projected 2021/22 ending stocks are raised 20 mb to 648 million but are still 23% lower than last year.  Exports were lowered 15 mb to 810 million on slowing export sales and shipments with reductions for Hard Red Winter and White.

Projected 2021/22 world ending stocks were lowered 1.7 mmt to 278.2 million with reductions for Canada and India partially offset by increases by the United States and Ukraine. Global stocks are now projected at a 5-year low.