Last night the USDA released their January World Agricultural Supply & Demand Estimates (WASDE) report. While the report held little for the wheat bulls, it certainly gave the corn and soybean market a boost.
The USDA cut harvested corn by 1.6million acres, which more than countered the increase in yield. The resultant cut of over 5Mmt was the biggest ‘miss’ in over 7 years and significantly tightens US carryout.
The USDA also cut Argentinian corn production after lingering drought has stalled seeding at 90% of average but also hurt crop development. The cut of 3Mmt to 52Mmt is relatively moderate relative to Argentine grain exchange Rosario releasing a corn production number of 45Mmt. Similarly, the USDA’s soybean estimate for Argy looks a little optimistic at 45Mmt given Rosario simultaneously released a 37Mmt production figure (from 49Mmt).
In the great playground of grain marketing, where there are swings, you’ll also find roundabouts. Firstly, the USDA completely ignored Russian analysts reporting of 101-102Mmt of delivered wheat production and instead kept their estimates at 91Mmt. Australian production, while widely being forecast at 40-42Mmt, was left at 36.6Mmt. One could argue that had the USDA adopted the heresay production figures, it could have been quite a bearish report for wheat.
US winter wheat sown area also caught the market bulls off guard with an increased sown area of 11% to 37M acres. Some 59% of the winter wheat areas in the US is considered in drought – down from its peak of 75% in November. Should the sown area be released, it would be the biggest area sown to winter wheat in 8 years and arrests a multi year slide in wheat area.
So what does it all mean? The reduced production estimates was partially offset by a slight reduction in consumption – not enough to cancel it out. We may find that wheat rides on the coat tails of the row crops as the US in particular will need to ration demand. Chinese purchases of Brazilian stock will assist with managing the US stockpile.
The week ahead….
The bullish corn and bean data should be positive for feed wheat demand and barley as feed buyers look for alternatives.
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
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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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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USDA- swings and roundabouts
The USDA cut harvested corn by 1.6million acres, which more than countered the increase in yield. The resultant cut of over 5Mmt was the biggest ‘miss’ in over 7 years and significantly tightens US carryout.
The USDA also cut Argentinian corn production after lingering drought has stalled seeding at 90% of average but also hurt crop development. The cut of 3Mmt to 52Mmt is relatively moderate relative to Argentine grain exchange Rosario releasing a corn production number of 45Mmt. Similarly, the USDA’s soybean estimate for Argy looks a little optimistic at 45Mmt given Rosario simultaneously released a 37Mmt production figure (from 49Mmt).
In the great playground of grain marketing, where there are swings, you’ll also find roundabouts. Firstly, the USDA completely ignored Russian analysts reporting of 101-102Mmt of delivered wheat production and instead kept their estimates at 91Mmt. Australian production, while widely being forecast at 40-42Mmt, was left at 36.6Mmt. One could argue that had the USDA adopted the heresay production figures, it could have been quite a bearish report for wheat.
US winter wheat sown area also caught the market bulls off guard with an increased sown area of 11% to 37M acres. Some 59% of the winter wheat areas in the US is considered in drought – down from its peak of 75% in November. Should the sown area be released, it would be the biggest area sown to winter wheat in 8 years and arrests a multi year slide in wheat area.
So what does it all mean? The reduced production estimates was partially offset by a slight reduction in consumption – not enough to cancel it out. We may find that wheat rides on the coat tails of the row crops as the US in particular will need to ration demand. Chinese purchases of Brazilian stock will assist with managing the US stockpile.
The week ahead….
The bullish corn and bean data should be positive for feed wheat demand and barley as feed buyers look for alternatives.
Have any questions or comments?
Click on table to expand
Sources: USDA, Reuters, Next Level Grain, Mecardo
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Time to cut the BOM some slack
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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.
Research: Analysis of the Australian sheep flock
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.