WASDE preview: All eyes on further cut to Argentina's soy crop

The soybean market's focus is fixed squarely on Argentina ahead of this Thursday's monthly supply and demand update from the USDA, with the expectation of a further production cut on the back of damaging dry weather, according to analyst surveys from Reuters and Bloomberg.

Opinions on the extent of the damage differ, keeping the expected range wide, with the upper end at 53 million mt and the lower end at 43 million mt.

However, all analysts agree that the crop will be less than the USDA’s February estimate of 54 million mt, with the survey average at 48.4 million mt, according to Reuters.

La Nina has kept Argentinian soybean crop abnormally dry since last November, with analysts expecting yields to fall as a result.

The Buenos Aires Grain Exchange (BAGE) cut its estimate to 44 million mt last Thursday, down 10 million mt from since the start of the season, and almost 14 million mt less than last year’s production.

Further north, the Brazilian crop has benefitted from La Nina with favourable weather boosting local yield to 3.4 mt/ha and setting Brazil up for another record year.

The market seems to uniformly agree that the expected size of the Brazilian crop is higher than last month’s USDA’s forecast of 112 million mt, with the average of expected values at 113.9 million mt, but reaching as high as 116 million mt, according to a Bloomberg survey.

Brazil’s agricultural analysis agency AgRural already increased its estimate of the country’s soybean crop to 117.9 million mt, up by 1.7 million mt from the previous forecast thanks to beneficial rains.

The improvement in the Brazilian crop did not bring any solace to the soybean market, as the gains in Brazil are not offsetting the losses in Argentina, with an expected fall in global stock levels as a result.

Analysts’ average for global ending stocks are 95.3 million mt, falling as low as 93 million mt and with the upper end of the range unchanged from USDA’s February update of 98.1 million mt.

Over in the US, the market expects no change from the USDA’s February update on its closing stocks at 530 million bushels.