Down goes supplies, consumption, trade and stocks of wheat in the October USDA World Agriculture Supply and Demand Estimates (WASDE) report. Reduced production for the US and Argentina outdid higher EU production. Consumption cuts led to the initial response of wheat prices stumbling lower but as we know all too well, it’s the news from the war that’s really driving the market.
WASDE summary by crop:
Wheat:
US production was estimated at 1.65 billion bushels, down from 1.78 billion bushels in September as a result of a full bushel/acre yield cut and a 2-million-acre reduction in harvested acreage.
Australian production was unchanged at 33mmt for 2022/23.
Wheat world ending stocks were estimated at 267.5 million tonnes (mmt), a reduction from 268.6mmt in September.
Global wheat production was estimated at 781.7mmt, down from 783.9mmt in September.
Russia and Ukraine’s wheat production (Russia- 91mmt, Ukraine- 20.mmt) and exports (Russia- 42mmt, Ukraine- 11mmt) remained unchanged from September.
Corn:
The USDA lowered 2022-23 beginning stocks by 5mmt to 307mmt.
Global production was reduced by ~4mmt to ~1169mmt.
Exports globally were lowered 0.54mmt to ~183mmt.
Ending stocks were forecast at ~301mmt, down ~3mmt.
Looking at production elsewhere, the USDA stayed put on Brazil at 126mmt and Argentina at 5mmt.
On exports, the USDA increased Ukraine’s projected exports by 2.5mmt to 15.5mmt.
Soybeans:
Global soybean ending stocks for 2022-23 increased by 1.6mmt to 100.52mmt. The increase was largely due to higher beginning stocks and production.
South American farmers are just getting started with planting the 2022-23 crop, and while the USDA left Argentina’s soybean production unchanged from previous estimates at 51mmt, it increased Brazilian production by 3mmt to 152mmt. The USDA also sees higher exports from Brazil and Argentina offsetting a decline in U.S. exports.
China is expected to buy 1mmt, more soybean on the global market than previously thought, amounting to 98mmt.
The week ahead….
Cbot Dec-22 wheat hit a three month high on Monday before stumbling lower. Week on week the contract improved, gaining 2% to close Thursday at $521/t in AUD terms which was also supported by the lower AUD. Looking ahead, the market will be awaiting news of whether the Black Sea grain corridor will be extended beyond its current mid November renewal timeframe.
Locally, following the flooding in Vic, NSW and Tas, we are already starting to see expectations of widespread quality down grading reflected in the market.
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
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The news that makes the market
WASDE summary by crop:
Wheat:
Corn:
Soybeans:
The week ahead….
Cbot Dec-22 wheat hit a three month high on Monday before stumbling lower. Week on week the contract improved, gaining 2% to close Thursday at $521/t in AUD terms which was also supported by the lower AUD. Looking ahead, the market will be awaiting news of whether the Black Sea grain corridor will be extended beyond its current mid November renewal timeframe.
Locally, following the flooding in Vic, NSW and Tas, we are already starting to see expectations of widespread quality down grading reflected in the market.
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Data sources: Refinitv, USDA, Nutrien, Next Level Grain
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
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In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.