WASDE: Argentina’s soybean production cut to 40m mt, global stocks dip
A decline in US soybean end stocks and a larger-than-anticipated cut to Argentina’s production caught the market by surprise Tuesday, although the USDA’s forecast in its monthly supply and demand update remained largely in line with market expectations.
The May futures contract jumped 0.7% to $10.64/bu in the seconds following the report’s release, but came back down during the minutes after to trade where it had been seen prior to the release around $10.57/bu.
A 5 million bushel reduction which took US ending stocks to 550 million bushels was the biggest surprise of the day, with the market expecting a 20 million bushel increase according to analyst polls released last week.
The USDA trimmed its end stocks following its Prospective Plantings report published March 29, which showed US soy acreage at just 89 million acres, below the market’s expected record high of 91.1 million acres.
In South America, Argentina’s production cut was also larger than had been expected, as 7 million mt was cut from the March update to take it to 40 million mt, although the figure remained roughly in line with most other market analysts and was little cause for extra shakeup in the market.
Neighbouring Brazil’s crop was lifted 2 million mt to 115 million mt, in line with expectations, but the USDA’s view remains one of the most conservative forecasts out there.
Global end stocks were lowered to 90.8 million mt, down 3.6 million mt on the month and below the market’s expected 93 million mt, as losses in Argentina offset gains in Brazil.