The USDA lowered its soybean production forecast but raised its canola production forecast

In a December report, USDA experts lowered their forecast for world oilseed production by just 0.46 million tons to 661 million tons, due to a decline in the soybean crop in Brazil, which will be offset by an increase in canola crops in Canada and Australia.

Compared to the November estimates, the December soybean balance for the 2023/24 MR underwent the following changes:

The estimate of initial stocks was raised by 1.6 to 101.92 (98.06) million tons, following an increase in the estimate of soybean production in Brazil in FY 2022/23 by 2 to 160 million tons.

• The global production forecast was reduced by 1.54 to 398.88 (374.39) million tons, in particular for Brazil – by 2 to 161 (160) million tons due to heat and drought in the state of Mato Grosso and in the northeast of the country. This is partially offset by the increase in the harvest in Canada and the Russian Federation.
• The estimate of world exports was increased by 2 to 170.29 (171.12) million tons, in particular for Brazil - by 2 to 99.5 (95.5) million tons against the background of an increase in initial stocks after adjusting data on the harvest in FY 2022/23 .
• The import estimate for China was increased by 2 to 102 (100.85) million tons due to active purchases at the beginning of the season.
• The forecast of global ending stocks was reduced by 0.3 to 114.21 million tons (101.92 million tons in 2022/23 FY, 99.7 million tons in 2021/22 FY and 100.3 million tons in 2020/21 FY), while analysts estimated them at 112.76 million tons. For Brazil, the estimate of reserves was reduced by 2 million tons, and for China - increased by 2 million tons.

According to the report, January soybean futures on the Chicago Stock Exchange fell by 0.5% to $479.1/t (-1.8% compared to the date of the November report), while March futures are trading at $486/t.

At the same time, the USDA increased the forecast of world rapeseed production in 2023/24 MR by 1.4 to 87 (88.82) million tons, in particular for Canada – by 1 to 18.8 (18.7) million tons and Australia – by 0.4 to 5.5 (8) million tons. As a result, the rapeseed export forecast for Australia was increased by 0.2 to 4.4 million tons and Canada – by 0.2 to 7.7 million tons, while for Ukraine it was reduced by 0 .2 to 3.45 million tons.

The forecast of world production of sunflower in 2023/24 MR was reduced by 0.18 to 56.8 (52.38) million tons, in particular for Argentina – by 0.2 to 4.5 million tons.

The Brazilian agency CONAB reduced the forecast of soybean production in the country by 2.24 to 160.18 million tons compared to the November estimates, while leaving the estimate of the sown area at 45.3 million hectares, which will exceed last year's level by 2.8%. Soybean exports from Brazil in FY 2023/24 are estimated at 109.59 million tons, while the USDA forecasts it at 99.5 million tons.

Therefore, from the end of January, soybean deliveries from Brazil will increase the pressure on world quotations.