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Trade Expectations for May WASDE Report

Supplies are forecast to remain overall snug

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Brazil Corn Production Forecast Cut

  • CONAB cut its second corn crop outlook for all of Brazil to 79.8 million tonnes, down from 82.6 million last month.

  • The government agency now sees the total Brazilian corn crop at 106.41 million tonnes versus 108.96 million last month, and left exports unchanged at 35 million tonnes.

  • IMEA reduced its corn production forecast for Mato Grosso to 34.6 million tonnes from 35 million last month and 35.5 million last year.

  • AgRural cut its second crop corn projection for the Center South region to 65.1 million tonnes from 73 million tonnes last month.

  • Serious moisture stress continues to impact safrinha corn production areas of Brazil.

  • Topsoil moisture is nearly exhausted in Brazil, but at this time of year it is the subsoil moisture that matters most and its rating was still marginally adequate to short.

  • Scattered rainfall is expected today, but the heaviest rain will likely occur to the east of major corn production areas.

FBN’s Take On What It Means: CONAB’s forecast is still well above those of most private consultants. However, dry conditions are becoming more stressful for second crop corn and yield potentials are likely to slide further. Corn production forecasts are in retreat, and an estimated 40% of the crop will reproduce in the second half of this month at a time when soil moisture will be significantly lower which raises concern over yields and crop quality. Lower production in Brazil is likely to support demand for US corn through the summer.

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FBN

Trade Expectations for USDA’s May WASDE Report

  • USDA’s report is scheduled to be released May 12; the report will include USDA’s first balance sheet outlooks for the 2021/22 crop year.

  • The trade sees tighter old-crop US ending stocks versus the April numbers.

  • For new crop, the trade sees US wheat stocks declining with corn and soybeans gaining slightly but remaining tight.

  • The biggest change versus May is Brazil’s corn production outlook; the average trade estimate is at 103 million tonnes versus 109 million in April.

  • USDA is expected to cut the crop but could wait to move the needle by that volume until the June or July report; harvest for winter corn starts in June.

  • The trade sees global wheat stocks coming in at 294 million tonnes for the 2021/22 crop year, which would be down marginally from 2020/21 expectations at 295.5 million.

  • Global corn stocks are seen at 283 million tonnes for 2021/22, which would be down marginally from USDA’s 2020/21 forecast but would be higher than trade expectations for 2020/21 stocks at 279 million.

  • Global soybean stocks are seen rising to 88 million tonnes versus 87 million.

FBN’s Take On What It Means: Trade expectations for the report essentially are for no big changes to US or global balance sheets for the coming crop year. Supplies are forecast to remain overall snug; our guess is that production totals will be up for 2021 harvests versus 2020 harvests for the EU and Black Sea regions.

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