In its Jan. 13 World Agricultural Supply and Demand Estimates, the U.S. Department of Agriculture forecast included higher foreign soybean stocks and lower production, crush, and trade. Beginning stocks were raised due to an upward revision to Brazil’s 2021-22 soybean crop to 129.5 million tons, driven by higher than expected use through the end of the local year.
Foreign 2022-23 soybean production was lowered 1.3 million tons as lower production for Argentina and Uruguay was partly offset by higher production for China and Brazil.
The WASDE reduced its foreign 2022-23 soybean crush estimates by 2 million tons, mainly for Argentina and China. Argentina’s crush was reduced on lower supplies, while crush for China was reduced on a lower than expected pace during the first quarter of the marketing year. Partly offsetting those reduced crush estimates was a higher soybean crush estimate for Brazil.
Argentina’s soybean crop was reduced 4 million tons to 45.5 million on lower area and early season heat and dry weather conditions. China’s soybean crop was increased by 1.9 million tons to 20.3 million on reports from China’s National Bureau of Statistics. Brazil’s crop was increased 1 million tons to 153 million on higher area.
Foreign soybean exports were reduced on lower exports for Argentina that were partly offset by higher exports for Brazil. China’s imports were lowered 2 million tons to 96 million on lower crush demand. With higher beginning stocks and lower use, global soybean ending stocks are increased 0.8 million tons to 103.5 million.
Is China back?
According to USDA’s Jan. 6 International Agriculture Trade Report, U.S. agricultural exports to China in fiscal year 2022 were $36.4 billion and surpassed the previous year’s record, with China as the largest export market for the second consecutive year. Significantly higher agricultural prices and resilient demand helped drive exports above the previous year’s record despite lower volumes for most products.
“U.S. exports have returned to trend growth experienced since the People’s Republic of China’s accession to the World Trade Organization,” the report concluded, “and in the last two years the United States has witnessed record export values to China for soybeans, corn, beef, chicken meat, tree nuts, and sorghum. Cotton exports to China have also rebounded, propelled by strong demand.”
Parsing soybean sales figures
U.S. soybean sales to China could be up by 5% compared this time last year—if certain figures are combined. That was the message of Carlos Salina, regional director for the Americas of the United States Soybean Export Council, in a Jan. 13 webinar hosted by USSEC executive director Jim Sutter.
Total U.S. soybean exports to China were estimated by USDA at 20 million metric tons, compared to 20.6 mmt for the same time last year, said Salinas. But if commitments to buy are added in, those are 6.3 mmt this year, compared to 4.1 mmt last year. Soybeans sold and shipped were 26.8 mmt, compared to 24.1 mmt last year. Some of these shipments did not have a declared destination, but “a good chunk of ‘unknown’ shipments go to China,” said Salinas. “When you factor those figures in, you get close to 5% growth in shipments to China.”
Emily French, founder of Global AG Protein, pointed out that while the U.S. dollar is softening, global credit is growing tighter and more expensive. She said the global soybean supply cushion is about 100 days, similar to where the market was in the last three years at this point. Brazil will be the world’s biggest “storage tank” of soybeans this year, she said, holding about 32% of reserve stocks.
Wheat outlook
The 2022-23 WASDE wheat outlook was for increased supplies, larger domestic use, unchanged exports, and lower ending stocks. Supplies were raised on higher beginning stocks as reported in today’s NASS Grain Stocks report. Feed and residual use was raised by 30 million bushels to 80 million, based on higher second-quarter implied disappearance based on the grain stocks report.
World wheat consumption for 2022-23 was raised by 0.2 million tons to 789.7 million as higher feed and residual use for the U.S. more than offset a decline for Ukraine. Projected 2022-23 global trade was increased by 0.8 million tons to 211.6 million, as increases for the EU and Ukraine more than offset a decline for India.
EU and Ukraine exports were raised 0.5 million tons each to 36.5 and 13 million respectively on higher exportable supplies. Projected 2022-23 global ending stocks were raised 1.1 million tons to 268.4 million, with increases for the EU, Ukraine, Kazakhstan, and India more than offsetting declines in Saudi Arabia and Iran.
Corn acres cut
The 2022-23 U.S. corn outlook was for reduced production, food, seed, and industrial use, feed and residual use, exports, and ending stocks. Corn production was estimated at 13.73 billion bushels, down by 200 million. An increase in yield was more than offset by a 1.6 million acre cut to total harvested area.
Total corn use was reduced by 185 million bushels to 13.915 billion. Corn exports were reduced by 150 million bushels to 1.925 billion, reflecting the slow pace of shipments through December. It was the lowest level of outstanding sales as of early January since the 2019-20 marketing year, according to USDA.
—David Murray can be reached at [email protected].
