January WASDE to Show More Cuts in Corn, Soybean Production, Gro Predicts

Ahead of the January 12 WASDE report, Gro’s US and Argentina corn and soybean yield models indicate that the USDA’s corn and soybean supply forecasts will be cut again. The USDA’s January WASDE report is one of the agency’s most consequential reports, as it contains final US numbers for the past season and projections for the current Southern Hemisphere season. 

Since the start of the 2022 growing season, Gro’s yield and production estimate projections have been below those of the USDA, as we reported here and here. 

With Argentina’s corn and soybean growing areas suffering under their worst drought since 2009, as shown by the Gro Drought Index in Gro’s Climate Risk Navigator for Agriculture, Gro expects the USDA’s January WASDE report to feature significant production cuts for both crops. 

In contrast, crops in Brazil have gotten off to a strong start in 2023 after three years of drought, and we expect the USDA will maintain their optimistic view for both soybeans and corn production in the country.

As the growing season progresses, the outlook for Argentina’s corn and soybean crops could improve if rainfall increases. But currently, the country’s crop prospects are dim.  

In Argentina’s corn growing areas, severe drought and high temperatures have driven Gro’s yield forecast sharply lower, and there are concerns that harvested acreage also could decline. Gro predicts Argentina’s corn production will drop by double-digits to the lowest in five years. That in turn would depress the global corn stocks-to-use ratio, a measure of supply availability, to its lowest level since 2014. 

For Argentina’s soybeans, Gro’s yield forecast model, coupled with an expected decline in harvested acreage, is pointing to a similarly steep drop in production that would take soybean output to levels not seen since 2018. Based on this, we expect the USDA to cut its forecast for Argentina soybean production as well as its estimates for exports and soybean crushing in the country. Argentina is the world’s largest exporter of soybean oil and meal. 

Our Argentina corn and soybean yield forecast models accurately predict yields 5-6 months before the Ministry of Agriculture, Forestry, and Fisheries’ reports its final numbers, as noted in the Gro 2021 Performance Report on Yield Forecast and Acreage Models. Gro will be publishing our 2022 Performance Report later this month. 

In the US, Gro’s US corn and soybean yield models suggest that the USDA will trim its corn production numbers when it publishes its final US crop production report for 2022 on January 12. For the past six years, Gro’s US national corn yield estimate has been within 1.7% of the USDA final January report by September, and our soybean yield estimate has been within 0.8% of the USDA’s final number by September for the past three years, as we reported here. 

Gro currently expects that 2022 US corn production will come in lower than the USDA’s latest forecast for a 13.9 billion-bushel crop. To some degree this dip will be offset by lower corn demand estimates; corn’s use in ethanol production is down 5% from the same three-month period last year, due to weak ethanol production margins and lower US gasoline demand. Concurrently, the pace of US corn exports is sluggish, pointing to further cuts in the USDA’s corn export estimate. Since July, the USDA has trimmed its US corn export estimate for the 2022/23 marketing year by 14%.