03/07/23 Grain Market Go Around Ahead of USDA WASDE

The primary trade expectation for Wednesday’s WASDE report is a substantive reduction in their estimate of Argentine production due to what has become a record drought there. USDA currently has the Argentine soybean crop at 41 mmts and that it will be lowered is a given. The average trade estimate is 36.7 mmts but the low end of the range of estimates is far worse. The Argentine grain exchange has soybean production there at 33.5 mmts and that is the number that the market is more likely targeting. The soybean market has bounced back, led by soymeal, predicated on a bullish number Wednesday. The tell will be in how the soybean market reacts to a bullish number. It makes it harder to be surprised when the market has been trading a bullish fundamental for some time and expects something bullish. They have bought the rumor. How much of the Argentine loss will be offset by record soybean production in Brazil? The trade looks for USDA to hold their estimate of Brazil’s soybean crop near 153 mts. The soybean market has been at this job of pricing in the Argentine drought for some time and there is no shortage of soybeans…