Next Tuesday, Feb. 11, USDA will release its February Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports. The February edition of the WASDE often falls under the shadows of its predecessor but will likely offer the most accurate view to date of 2024-25 corn and soybean production expectations in South America and may hold some surprises for the U.S. balance sheet as well.

CORN

Corn futures have extended their late-fall rally into the New Year since USDA surprised the market on Jan. 10 with a sizeable cut to 2024 U.S. corn production, as well as cutting U.S. ending stocks to 1.540 billion bushels (bb). If there was a source of frustration in the January figures, it was that USDA decided to pencil in some early demand destruction as a result of lesser supply. It cut total demand by 75 million bushels (mb) between reduced feed usage and exports, although total demand remains estimated as record large. The cut to exports was particularly interesting to me given the current pace of USDA exports compared to both last year and the previous five years. Since the January report, the U.S. corn export book has gone on to post one of the more impressive Januarys in recent history. Total corn sales over the month were the largest since the record export year of 2020-21, with shipments over the month running neck and neck with that season as well. As of Thursday, Jan. 30, corn commitments are running 28% above 2023-24 with the USDA estimate only calling for an increase of 7% year over year. The average estimate for U.S. corn ending stocks in Tuesday's report comes in at 1.537 bb according to the Dow Jones pre-report survey of analysts. If correct and USDA decides to reduce ending stocks, I can definitely see increased corn exports as a way to accomplish this.

What may be of more interest to many traders this time around for the WASDE is how USDA will gauge South American production. For this time in February, the more accurate estimate is likely to come out of Argentina, as the Brazilian safrinha crop, which accounts for north of 75% of total corn production in Brazil, is in the early stages of being planted. In fact, the slow start to the planting season could prove problematic down the road, but I don't see USDA taking that into account just yet. Analysts surveyed by Dow Jones agree, calling on average for Brazilian corn production to hold steady at 127 million metric tons (mmt). It is worth noting that this estimate is running 7 mmt ahead of Brazilian agency CONAB's 119.7 mmt estimate. For Argentina, things may be more interesting on Tuesday, as a very dry and hot last part of December and first half of January likely did some damage to a corn crop, which, as of Wednesday, Feb. 5, is roughly 50% pollinated. The average of analysts' estimates is calling for Argentine corn production at 49.6 mmt, down from the current USDA estimate of 51 mmt. All totaled, the expectation is for another slight reduction in world corn ending stocks to 293.1 mmt, which would still stand as the tightest world stocks in a decade for corn.

SOYBEANS

A month ago, the January WASDE served as a catalyst for soybean futures, which have since rallied over 50 cents as a result of the 90-mb cut in U.S. ending stocks estimated by USDA in that report. This time around, analysts expect a much more subdued report on the U.S. side of things. Analysts surveyed by Dow Jones are largely mixed on expectations for corn ending stocks, but the average estimate called for a 2-mb increase in ending stocks to 382 mb. This seems like a fair assessment to me, as while soybean crush demand is very strong, setting two separate monthly records throughout the marketing year thus far, USDA is already estimating 2024-25 crush at a record and a 5.4% increase of 2023-24. The current pace running 6.3% above 2023-24 may not be a large enough gap at this point to warrant stretching the record estimate further. Meanwhile, the soybean export pace has slipped over the past month or so. It is still trending slightly ahead of USDA's expected improvement in year-over-year exports, but that gap has narrowed. Increasing exports on Tuesday may prove difficult given the uncertainty surrounding the U.S. trading relationship with China ahead of what could still be record-setting soybean production in South America.

Looking to South American soybean production, analysts surveyed by Dow Jones expect a cut to Argentine soybean production of 1.4 mmt, down to 50.6 mmt, due to the very dry January likely causing yield loss among early pod-setting soybeans there. However, analysts are calling, on average, for a 0.9-mmt increase in Brazilian soybean production to offset at least part of the cuts predicted for Argentina. The net result should lead to a fairly static world ending stocks estimate for soybeans, estimated on average at 128.5 mmt, still record large by a wide margin, with China making up a very large share of those stocks.

WHEAT

Last month, USDA kept the U.S. wheat outlook unchanged for the most part. It increased ending stocks by 3 mmt because of higher expected wheat imports due to the strong U.S. dollar, particularly in relation to the Canadian dollar. Demand for U.S. wheat was increased slightly on higher seed usage. Meanwhile, since the report, world wheat prices have steadily risen ahead of the Russian export quota taking effect on Feb. 15. U.S. March Kansas City wheat futures this week traded to their highest level since October 2024. The expectation for Tuesday is for another quiet report for the U.S. balance sheet, with analysts calling on average for a 2-mb increase in ending stocks to 800 mb. Given the steadily weaker Canadian dollar relative to the U.S. dollar, USDA has increased wheat import expectations in each WASDE report since October. I would not be surprised to see that trend continue Tuesday. On the demand side of the U.S. balance sheet, given the hit-or-miss pace of wheat exports over the past couple months, I would be surprised to see any improvement in this category, although I also don't expect any cuts either at least at this point.

On the world wheat balance sheet, the Dow Jones survey of analysts is calling for a slight 0.1-mmt cut in wheat ending stocks to 258.7 mmt. The categories of note will be Russian wheat exports, which are being estimated as much as 3-mmt-plus lighter via private analysts versus the USDA January estimate. I am also interested to see how USDA views Argentine wheat production, with the Buenos Aires Grain Exchange estimating the 2024-25 harvest that concluded last month at 18.6 mmt versus USDA's January estimate of 17.5 mmt.

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Join us for DTN's webinar at 12:30 p.m. CST Tuesday, Feb. 11, as we discuss USDA's new estimates in light of recent market events. Questions are welcome, and registrants will receive a replay link for viewing at their convenience. Register here for Tuesday's February WASDE report webinar: https://www.dtn.com/….

Rhett Montgomery can be reached at rhett.montgomery@dtn.com

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