USDA increased its forecast for global wheat stocks despite the war in Ukraine but also cautioned that the Russian invasion had “significantly increased the uncertainty” of agricultural supplies and demand around the world.

In its first assessment of the impact of the war on grain and oilseed supplies, USDA said it raised its estimate for global wheat production mainly because of a higher forecast for production in Australia. Both Australia and India are expected to help offset a reduction in exports from Russia and Ukraine. 

USDA’s monthly World Agricultural Supply and Demand Estimates report lowers the forecast for ending stocks for corn in both the U.S. and globally. USDA sees increased domestic use of corn as well as exports. The estimate for U.S. corn exports was raised 75 million bushels to 2.5 billion bushels, “reflecting expectations of sharply lower exports from Ukraine,” the report said.

Ukraine is a major producer and exporter of corn as well as wheat and sunflower seed, and the war has raised questions about how much of its winter wheat crop can be exported in coming months and how much corn and sunflowers farmers will plant there this spring. 

Wheat futures were down sharply ahead of and after the release of the WASDE report. At Chicago, May futures of soft red winter wheat were trading at $12.01 per bushel, down the limit of 85 cents a bushel. Kansas City hard red winter futures were down the limit to $11.14.

USDA raised its estimate of global ending stocks for wheat by 3.3 million tons from February to 281.5 million tons. The trade had expected the new USDA forecast to be 277.6 million tons, according to Reuters.

USDA lowered its estimate for Ukraine’s wheat exports by 4 million tons to 20 million tons due to the war. The forecast for Russian exports was lowered by 3 million tons to 32 million; USDA said “vessel transportation is expected to be constrained by the conflict and the imposition of economic sanctions" on Russia. The estimated increases for exports from Australia and India of 2 million and 1.5 million tons respectively could ease the near-term impact of the war on supplies. 

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"The wheat dynamic is far from settled as we move into that new crop year," said Brian Basting, research analyst for Advance Trading Inc. "Top of the list is what’s going to happen with Ukraine and Russian exports” for the 2022-2023 marketing year, which starts in June. 

Sunflower seed is a significant source of global vegetable oil supplies, and USDA lowered its estimate of the sunflower seed crush by 2.2 million tons due to the war.

“Major markets impacted by lower Ukrainian sunflower seed crush and product exports include India and the EU,” USDA said. “Lower sunflower product supplies in these markets are partly offset by higher soybean oil imports for India and rapeseed imports for the EU.”

Dry weather that has challenged farmers in South America continues to have an impact on the soybean market. USDA increased its estimate of U.S. exports and lowered its estimate for soybean ending stocks by 40 million bushels to 285 million bushels.

USDA lowered its estimate of Brazil’s soybean crop by 7 million tons to 127 million and Argentina's by 1.5 million tons to 43.5 million.

USDA raised its forecast for U.S. soybean oil exports due to the tightening supplies of sunflower oil and vegetable oil more broadly.

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