USDA Wasde Overview

Wheat: In the April WASDE, US wheat supplies eased with ending stocks increasing from 15.47Mt to 16.28Mt as US domestic demand estimates fell, mainly driven by a reduction in domestic feed use.
For the EU, stocks also grew as import estimates increased from 9Mt to 10.5Mt, meanwhile EU feed use increased from 45Mt to 47Mt, countered by a reduced export projection, leading ending stocks rising from 11.06Mt to 12.16Mt.
In the Black Sea, Russian export projections have been raised to 45Mt, up from 43.5Mt. Meanwhile, exports from Ukraine were also increased by 1Mt to 14.5Mt.
With an easing of US wheat supply, Chicago futures have come under further pressure.

Corn: Changes to corn supply and demand estimates were in comparison relatively minor, US estimates were left near enough unchanged with only minor adjustments made to import projections.
For Argentina, production estimates have been lowered to 37Mt, with exports lowered to 25Mt.
In Ukraine, as well as the confidence in wheat export volumes, corn exports have also been revised higher, standing now at 25.5Mt and up 2Mt from the March estimate.
However, the EU drought of last summer is now being better quantified, with production estimates lowered to 52.97Mt from 54.2Mt with import estimates increased by 1Mt to 24.5Mt.

Soybeans: For soybeans,  US estimates were once again left unchanged, while in Argentina, the drought impacts for soybeans also reduced production estimates, down to an expected 27Mt from 33Mt estimated in March, resulting in an increased import requirement from 7.25Mt to 8.3Mt. Soymeal exports have, as a result of the production downgrade, been lowered from 24.9Mt to 22.4Mt.
With further cuts to soymeal supply, Chicago soymeal futures have been receiving support.
However, in Brazil, and large crop estimates continue to increase, with production now estimated at 154Mt, up a further 1Mt.

Market Reaction

Chicago wheat futures showed bigger losses, reversing gains of the last session made after weekend comments from Russia raised clouds over the future of the Black Sea grain export deal.
US data overnight showed an unexpected further decline in the condition of the US winter wheat crop, including a 3-point decline to 13% in the proportion of crop rated good or excellent in Kansas, the top US wheat-growing state.
However, the Wasde was mixed for futures, showing a bigger-than-expected upgrade in the forecast for US stocks at the close of 2022/23, on a reduced feed consumption forecast, but a cut in expectations for global inventories.
Trading in European futures, which were closed on Monday for holidays, was more resilient, still factoring in the Russian comments. UK feed wheat for May-23 eased by 0.1%. Paris milling wheat for May-23 added 0.4%, after France said that a ban on using phosphine to fumigate grain exports would not hamper trade.

Soybean futures, the strongest of Chicago’s big contracts heading into the USDA’s Wasde, proved the most buoyant afterwards too, with the briefing underlining the poor outlook for Argentine production of the oilseed.

In grain markets, soybeans were higher too, up 0.6%, after a downgrade of 6.0Mt to 27.0Mt in the forecast for Argentina’s drought-hit 2022/23 soybean production backed up ideas of a supply squeeze also signalled by a weak start for farmer sales into the latest “soy dollar” window.
The window, which offers a favourable exchange rate for farmer sales of soybeans, attracted minimal volumes on Monday, its first day.
However, Chicago corn futures stayed in negative territory, by 0.4% for May-23, after the USDA made a smaller cut to its Argentine corn production forecast, for 3.0Mt to 37.0Mt while holding its estimate for US stocks of the grain at the close of 2022-23 when investors had expected a downgrade.

External markets traded broadly higher, amid expectations that a US inflation report on Wednesday will reinforce expectations that the Federal Reserve is nearing the end of its cycle of interest rate rises. Shares edged higher in major markets, while Brent crude gained 1.3% to return above $85 per barrel. The dollar lost ground against currencies including the euro, against which it shed 0.5%, and sterling, with a 0.3% loss.