Wheat old crop ending stocks are cut by -2.73T mainly due to an adjustment (to map the Australia Bureau of Statistics data) of Australian beginning stocks (-1.79MT) and production (-1.61MT) . New crop wheat change was obviously on Russia: production is raised by +3.5MT to 81MT, a record. EU crop is cut by -0.69MT to 148.87MT and Aussie crop by -1T to 22.5MT. This is not enough to erase the old crop effect and world ending stocks are cut by -1.55MT to 263.14MT , still a very good 35.68% of the use and 35.33% of the production. If some will try to identify bullishness on this report, on the other side, a world crop down by -8.46MT year on year (to 744.85MT) is not preventing stocks to raise (by a big +7.31MT year on year).

 

But what we were waiting was the corn and soybean yields, market was expecting a decent cut… And – surprise – USDA increased yields! Corn yield is now pegged at 166.9 bushels per acre (+0.4 bushel per acre) taking the crop to 360.3MT (+0.8MT) and 49.9 bushels per acre for soybeans (+0.5 bushels per acre) taking the crop to 120.59MT (+1.36MT). Next report we will be very close to the actual as harvests are going to kick off.

 

Let’s start with Corn specifically, also some adjustments on the old crop, mainly on the consumption, ending stocks are down -1.65MT. But it doesn’t bring a handicap to the new crop as ending stocks are raised by +1.6MT to 202.47MT, 19.15% of the use and 19.61% of the production. This is mainly due to lower use: -4.09MT (including -1.27MT in the US). Not much change funnily enough. World corn crop is down -38.6MT year on year (to still more than 1bT to 1,032.63MT) but stocks are down only -24.49MT. US crop is down -24.48MT year on year but is now back above 360MT thanks to the yield increase.

 

Soybeans, on the old crop again, lower production (-0.3MT) and higher consumption (+0.62MT) are driving a -1.02MT ending stocks. So new crop picture is not as pretty as it could have been: the US crop increase is not sufficient enough and with an increase of 1MT of china’s crush, world new crop ending stocks are down -0.25MT. Ending stocks are 28.33% of the use and 27.99% of the production so very comfortable. World crop is down -3MT year on year but stocks are up +1.57MT.

 

To conclude, after a couple of days of digestion, there was nothing massively exciting on this USDA WASDE. The picture is not as bullish as some were hoping or fearing and it confirmed there is plenty of wheat, corn and soybeans in case we had forgotten… Initial market reaction was bearish on Soybeans and Corn based on the yields with Soybeans ending -9.50 cents on Tuesday and Corn -6 cents. Wheat rebounded based on lower ending stocks, by +7.25 cents. But yesterday, market was not so sure anymore and Soybeans fully retraced (+10 cents) and Corn was flat while Wheat rebounded again with +1.25 cent.

 

And everything is up again today. It seems really like pure short covering as more or less now, the S&D won’t move drastically for a few months, and funds will be entering in the classic period of boredom so they are basically wrapping up their season. Soybeans are up +12.75 cents, Corn +2.50 cents and Wheat +3.50 cents.

 

MATIF Closed +€0.25 up on the day of the report (only 30 minutes post report) and rebounded +€2.00 yesterday and again +€1.25 today, purely following US markets. This rebound, in the US and EU, may face a reality check as Russia keep posting export reports. Financial markets are one thing, but ultimately the physical competitiveness will drive the trend, especially in the quiet months on the supply side. On the other side, London Feed moved down -£0.50 on the day of the report but it basically missed the fun and yesterday it rebounded +£1.15. Market is a bit softer today, -£0.25.

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