As expected, very few changes were made to the domestic balance sheets in the February supply and demand report. U.S. corn ending stocks are now estimated at 1.267 billion bu (bbu), an increase of 25 million bu (mbu) from January. This was the result of a reduction to projected ethanol demand. Soybean ending stocks were projected at 225 mbu, up 15 mbu from January. A reduction to crush was the catalyst for the higher soybean ending stocks. Wheat ending stocks are forecast at 568 mbu, up 1 mbu from last month. Average cash price estimates are $6.70 on corn, $14.30 on soybeans, and $9 for wheat.

More changes were made on the global side of this report. World corn ending stocks are now estimated at 295.3 million metric tons (mmt), just above trade estimates but down 1.1 mmt from January. World soybean reserves were projected at 102 mmt, which was right at the average trade guess but down 1.5 mmt from last month. The USDA did lower Chinese crush projections which was not expected, and in turn it lowered global soybean trade to absorb production losses. Global wheat carryout is projected at 269.3 mmt, above the average trade guess and 1 mmt more than in January.

The greatest changes in the monthly data were to Argentine production, which was not a surprise. Argentine corn production is now estimated at 47 mmt, a 5 mmt reduction from January. The Argentine soybean crop was lowered by 4.5 mmt to a total of 41 mmt. Brazil crops were left unchanged this month at 125 mmt on corn and 153 mmt on soybeans. The USDA also raised the Russian wheat crop to 92 mmt, up from 91 mmt last month. This is still well below Russia’s crop estimate of 104 mmt.

The USDA is now projecting 2023 beef production at 26.5 billion pounds, 1.8 billion less than in 2022. Pork production for 2023 is forecast at 27.44 billion pounds, up 440 million pounds from 2022. Average cash values on steers are now projected at $159 per hundredweight. This is up 75 cents from the previous estimate and a large $14.60 more than in 2022. The average hog value is estimated at $66.50 per hundredweight, down $1.50 from last month and down $4.71 on the year.

Prior to the USDA data being released, the official numbers on the Brazilian crops were released by CONAB. CONAB is forecasting a soybean crop of 152.9 mmt this year, slightly higher than the 152.7 mmt prediction from January. CONAB is estimating the country’s corn crop at 123.7 mmt, down from the 125 mmt in January as drought is thought to have impacted production in Southern Brazil. Brazil’s wheat crop is now projected to total 10.55 mmt, up from last month’s 9.76 mmt estimate. The firm is now projecting exports of 93.9 mmt on soybeans and 47 mmt on corn, both up from last year.

It is quite likely the competition we are seeing from Brazil in the world soy market will only increase. Officials in Brazil believe the country will expand its soybean plantings by 5 percent per year. At this rate the country will double its soybean production area within the next 20 years. Brazil currently has 371 million acres of idled pasture that it can easily bring into production when needed. Logistics remain the most restrictive factor for expansion in Brazil, but these issues are being resolved as they surface.

A story that is getting more attention in the market is Asian Rust Fungus cases in Brazil. As of last week, Brazilian authorities had reported 160 cases of rust, well above the 88 cases from last year. The cool, wet weather in Brazil has made perfect conditions for rust to develop. These are not expected to impact soybean production in Brazil, and in fact, analysts in the country have raised their estimates to 154 mmt. Rust treatments will impact the country by raising the cost of production by 10 percent though, tightening cash flows.

The U.S. cattle inventory report as of Jan. 1 has been released with lower numbers across the board. The total U.S. cattle inventory came in at 89.3 million head, 3 percent less than on Jan. 1, 2022. Beef cows came in at 28.9 million head, down 4 percent on the year. This was the lowest volume of beef cows in the U.S. since 1962. Cattle for slaughter came in at 14.2 million head on Jan. 1, 4 percent fewer than a year ago. These numbers give support to outlooks that the U.S. may see its beef supply tighten as the year progresses. Beef exports are down from last year though, and this will ease contraction in the beef supply.

The Ag Price Received report for December 2022 has been released and it’s of little surprise values were up on the year. Cash corn averaged $6.58 for the month, 9 cents better than November and $1.11 higher than in December 2021. Soybeans averaged $14.40 for the month, up 40 cents from November and $1.90 higher than in December 2021. Milling wheat averaged $8.98, down 18 cents from November, but 39 cents higher on the year. Beef cattle averaged $154 per hundredweight in December, $17 higher than December 2021. Hogs averaged $62.50, which was $6 higher than a year ago.

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