WASDE preview: All eyes on bean carryout, S. America production

This week the USDA will release its latest monthly report on global demand and supply of agricultural commodities; and key to watch for soybean will be the US carryout as well as production in South America.

According to surveys by newswires Reuters and Bloomberg, most market analysts expect a write down in US exports of soybean after weeks of fairly poor export sales and inspections.

US export shipments so far this year have totalled 1.275 billion bushels (34.7 million mt), down 14% on the 1.487 billon bushels that were exported last year and almost all of that fall is down to losing market share to China.

Last month the USDA estimated the carryout would be 470 million bushels (12.8 million mt).

“In order to stay up with (that)… we would need to average weekly inspections of roughly 32 million bushels to the end of August,” said Charlie Sernatinger, a broker with ED&F Man Financial.

Analysts see that figure as ambitious.

According to the Bloomberg survey, an average of analyst estimates expects the USDA to revise its carryout to between 455-540 million bushels, although that is seen as too low for some, with US-based Advanced Trading forecasting a carryout of 587 million bushels.

“Key focus will be on the USDA’s U.S. soybean export forecast which continues to look overdone at 2.16 billion bushels,” Advanced Trading said in a report.

Other closely-watched figures will the Argentinian and Brazilian production figures for soybean, with the market keen to see whether the USDA will revise down the former and up the latter to match private analyst expectations.

Last week, both Rabobank and the Buenos Aires Grain Exchange (BAGE) slashed their expectations for the Argentinian soy crop on poor weather.

Rabobank cut its production forecast to 51.5 million mt, while BAGE said it expected 51 million mt to be harvested.

The trade is looking for a similar cut from the USDA’s January number of 56 million mt.

In terms of Brazil, the trade is expecting a revision upwards from the agency’s previous estimate of 110 million mt towards 114 million mt, to match the 2016/2017 record crop.

Consultancy AgRural said last week it expected the Brazilian harvest to pull in 116.2 million mt.