An increase in the forecast of production and stocks of soybeans in 2023/24 MR puts pressure on quotations

In the May report, USDA experts slightly raised their FY 2022/23 soybean production and ending stocks forecasts and significantly increased their estimates for FY 2023/24 soybean production, consumption and ending stocks, which will add further pressure on quotes in the new season.

Compared to the April estimates, the new balance for soybeans for 2022/23 MR underwent the following changes:

• The forecast of initial reserves was reduced by 1.06 million tons to 98.67 million tons (100.35 million tons in FY 2021/22).
• The estimate of world production was increased by 0.78 to 370.42 (358.14) million tons, in particular for Brazil – by 1 to 155 (130.5) million tons, while for Argentina it was left at the level of 27 million tons (43, 9 million t in FY 2021/22 and 46.2 million t in FY 2020/21), although the Rosario exchange lowered its forecast to 21.5 million t and the Buenos Aires exchange to 22.5 million t.
• The global consumption forecast was reduced by 0.96 to 364.87 (363) million tons due to a reduction in processing volumes.
• The estimate of world exports was increased by 0.37 to 168.37 (167.4 and 153.9) million tons.
• The forecast of world ending stocks was raised by 0.75 to 101.04 (99.7 and 100.3) million tons, although analysts expected them to decrease to 99 million tons due to a decrease in the harvest in Argentina.

USDA also released the first balance sheet for soybeans for FY 2023/24, in which:

• the global production forecast has been increased compared to the previous season by 40.2 million tons to a record 410.6 million tons, in particular for Brazil – by 8 to the historically maximum 163 million tons, Argentina – by 21 to 48 million tons, Paraguay – by 1, 2 to 18 million tons, the USA - by 6.3 to 122.7 million tons due to improved productivity, China - by 0.2 to 20.5 million tons.
• The forecast for world trade in soybeans was increased by 4 million tons to 172.4 million tons thanks to increased demand from China and increased supplies to Egypt, Pakistan and Bangladesh after their decline last year. The export estimate was increased for Brazil - by 3.5 to 96.5 million tons, Argentina - by 1.3 to 4.6 million tons, Paraguay - by 0.2 to 5.9 million tons, although it was reduced for the USA by 1, 1 to 53.75 million tons. The import forecast for China was increased by 2 to 100 million tons.
• The estimate of global ending stocks was raised to 122.5 (101.04, 99.7, 100.3) million tons, although analysts estimated them at 108 million tons, given the low transitional stocks in Argentina. Stocks will grow the most in Brazil and the USA. Argentina and China.

In June, the balance may be significantly adjusted based on the data on soybean sowing in the USA and the harvest in Argentina. Therefore, traders are still not too confident in the optimistic balance for the new season, expecting warming caused by the El Niño phenomenon after three years of a long La Niño phenomenon, which affected temperatures and rainfall intensity in various regions.

According to the report, July soybean futures on the Chicago Stock Exchange fell 1.1% to $510.7/t, and November futures fell 2% to $449.7/t, losing 7.7% for the month and 7 .4% respectively.