NAPERVILLE, Illinois, June 11 (Reuters) – The U.S.
Department of Agriculture’s (USDA) June supply and demand report
could be more interesting than normal as the grain market has
been rife with developments over the past few weeks, including a
state of emergency in top wheat exporter Russia.
Analysts expect USDA’s global wheat, corn and soybean supply
estimates for 2024-25 will shrink from last month when the
agency publishes its data on Wednesday at noon EDT (1600 GMT).
Chicago wheat futures bounced 3% on Tuesday after nine
consecutive losing sessions, but corn and soybeans
were down fractionally as those U.S. crops are off to a great
start.
USDA’s June report by itself is not overly impactful on
futures, but its overlap with a critical U.S. crop weather
period can create volatility. Forecasts suggest the U.S. Corn
Belt could be in for a hot and dry stretch through late June,
stressing crops and maintaining some degree of uncertainty.
WHEAT
Russian wheat crop estimates started plunging right after
USDA’s May report, so a sizable reduction from the agency could
be in store. Consultancies IKAR and SovEcon since May 10 have
each cut their harvest pegs by 10%, or between 8.9 million and
9.5 million metric tons.
USDA set 2024-25 Russian wheat production last month at 88
million tons, not including the Crimean Peninsula. The Russian
consultancies’ estimates do include Crimea and currently sit
between 80.7 million and 81.5 million tons with potential
further downside.
That downside may already be justified as Russia on Tuesday
declared a state of emergency in southern Rostov, Russia’s No. 1
wheat-growing region, due to drought. Crop losses there could be
as much as 30%, a much larger area than has been previously
suggested by the Ministry of Agriculture.
Turkey’s ban on wheat imports until October could counter
Russian crop losses on the balance sheet. USDA has Turkey as the
fourth-largest importer in 2024-25 with 10.5 million tons,
though Turkey’s latest move aims to protect the domestic market.
India could offset some of the lost Turkish demand, and
Russian grain exporters are already eyeing Indian business. USDA
last month allocated negligible wheat imports to India in
2024-25 despite recent reports to the contrary.
The U.S. wheat crop is seen inching up 1% from last month’s
estimates. Analysts see global 2024-25 wheat stocks down 1% or
2.4 million tons from the May outlook.
CORN AND SOYBEANS
USDA in May cut its 2023-24 Argentina corn crop estimate to
53 million tons from 55 million in April, though Argentine grain
exchange estimates currently center around 47 million. Those
fell sharply in late April and early May due to a severe insect
outbreak that has caused corn losses exceeding $2 billion.
Argentina’s corn harvest was 46% complete as of last
Thursday versus 29% on May 9. Brazil’s heavily exported second
corn crop was 10.4% harvested as of Thursday, the fastest pace
in at least a decade.
The trade is looking for a 1-million-ton cut to Brazil’s
2023-24 corn crop after a 2-million-ton reduction last month,
though Brazil’s soybean crop is seen declining by 2.2 million
tons. USDA in May downsized Brazil’s soy crop by 1 million tons
due to flooding in Rio Grande do Sul.
Crop agency Emater earlier this month pegged Rio Grande do
Sul’s soy crop losses at 2.71 million tons. Brazil’s Conab will
be out early on Thursday with its monthly estimates, which
remain significantly below those of USDA.
Relative to expectations, U.S. soybean export demand for the
upcoming 2024-25 season is the lowest in 23 years, including
zero sales explicitly to China. But USDA has not reduced
new-crop soybean exports in June since 2012, even holding off on
necessary reductions in June 2018, when the U.S.-China trade war
was imminent and soy prices were crashing.
But U.S. soybean trade to China is not completely dead, as
two 104,000-ton, old-crop soy sales to China have been confirmed
within the past three trade sessions. That activity is somewhat
rare, as those are the largest daily old-crop soybean sales to
China during June in five years.
Karen Braun is a market analyst for Reuters. Views expressed
above are her own.
(Editing by Rod Nickel)
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