USDA sharply cuts U.S. soybean stocks

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    Porto Alegre, October 14, 2020 – The USDA’s October supply and demand report, released last Friday (9), focused the market’s attention over the week. The release was long-awaited by market players, who expected mainly a major reduction in U.S. stocks for the 2020/21 season, also due to a reduction in the 2019/20 stocks indicated in the quarterly stocks report. USDA confirmed the market sentiment, but the size of the negative adjustment was higher than expected. Moreover, USDA also lowered the U.S. crop, which was also higher than expected. In light of these adjustments, the report was considered bullish, allowing Chicago to pick up strength.

     USDA indicated that the U.S. soybean crop is expected to hit 4.268 billion bushels in 2020/21, equivalent to 116.16 million tons, below the previous estimate of 4.313 billion or 117.4 million. The market was projecting 4.292 billion or 116.8 million tons.

Final stocks are estimated at 290 million bushels or 7.9 million tons. The market expected carryover stocks of 360 million or 9.8 million tons. In the previous report, stocks were projected at 460 million bushels or 12.5 million tons.

     USDA estimated the crush at 2.180 billion bushels (59.33 million tons) and exports at 2.200 billion (59.87 million tons), repeating the September estimate for the crush, but raising exports, previously projected at 2.125 billion bushels (57.83 million tons).

     2019/20 production is estimated at 3.552 billion bushels (96.67 million tons). Final stocks in 2019/20 are projected at 523 million bushels (14.23 million tons).

     For the world scenario, USDA projected the global soybean crop of 2020/21 at 368.47 million tons. In September, the number was 369.74 million tons.

     Final stocks are estimated at 88.7 million tons. The market expected final stocks of 90.9 million tons. In September, the forecast was 93.59 million tons.

     USDA projects the U.S. crop with 116.16 million tons, as already mentioned. For Brazil, the forecast is for the production of 133 million tons, repeating the September’s figure. Argentina should produce 53.5 million tons, also without changes. The estimate for Chinese imports in 2020/21 is 100 million tons, up 1 million from the previous report.

     For 2019/20, USDA indicated a crop of 336.59 million tons. Final stocks are projected at 93.75 million tons, while the market was betting on 94.7 million. The Brazilian crop had its estimate maintained at 126 million tons.

     The Argentine crop was reduced from 49.7 to 49 million tons. Chinese imports are projected at 97.4 million tons, against 98 million forecast in September.

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